Chilean Trade and the Earthquake

The earthquake immediately disrupted trade and production, especially in the central southern part of the country where the quake was centered. Some of the disruption to production is because of power outages from the electric grid. Other disruptions were because of the large tsunami that followed quickly after the quake. Trade flows are most significantly affected in the central region ports, but initial reports are that most port wharves escaped with little damage. Inland infrastructure, especially the roadway network in the central region, has been more affected.

Copper is the country's biggest export-earning category, and most of it is handled through northern ports. While there were some brief mine disruptions, most production is already back up and running, with the transport links to ports operating. IHS Global Insight's World Trade Service estimated total 2009 Chilean exports of ore and non-ferrous metals to be US$33.4 billion in 2009, down over 20% compared with 2008 because of the recession. The quake disruption is expected to only slightly reduce the 2010 rebound in ore and non-ferrous metals from the 16.8% growth forecasted before the quake.

Exports of fruits and vegetables, Chile's next leading export category, are more affected. The earthquake hit in the midst of peak season for Chilean fruit exports to the Northern Hemisphere. Disruptions to the fruit-processing workforce, the roadway network to reach ports, and the loss of electric power to cold storage facilities may lead to losses for a portion of the export crop. Although a substantial amount of product has already been exported this winter, the previously forecasted 2010 export growth of 9.7% will now be less. The full impact will not be known until more complete damage assessments can be completed. Wine exports will also be affected because the wine-producing region was among the most heavily hit by the earthquake, although wine exports are not as seasonal as fresh fruits and vegetables.

Imports of the top commodity categories, crude oil and petroleum refinery products, will be affected by the quake. Crude imports will be reduced because the two refineries closed at least temporarily. Imports of petroleum refinery products will be higher as fuel is imported to substitute for the disrupted production. Other import categories will be reduced, as some households no longer have the resources to make purchases, while imported goods used for reconstruction will see a boom.

The pre-earthquake key commodity World Trade Service trade value forecasts for Chile are provided in the following table, with the recession and recovery influences on imports and exports quite substantial in 2009 and 2010. While overall 2010 exports now will be lower, imports of goods related to reconstruction are expected to be higher than in the pre-quake forecast because of stimulus that will come from rebuilding efforts over the next 10 months.