Boston, MA -- (SBWIRE) -- 01/09/2013 -- BMI View: Chile's strong business environment continues to attract investment. Combined with a wellfunded government stimulus programme, this investment is powering strong growth in the country's construction industry, with year-on-year growth of 7.0% forecast for 2012. This is anticipated to slow slightly over the longer term, with annual average growth of 3.6% forecast between 2013 and 2021. The construction industry is expected to increase in value over our forecast period, from US$20.0bn in 2012 to US$36.8bn in 2021.

Key developments in the sector:

? Chile is to invest US$83mn in road upgrades across Route G-21, which is also known as the Camino a Farellones. The Ministry of Public Works will receive bids for the improvement project between March 2012 and April 12 2013. The upgrades are scheduled to commence in 2014 and end by 2016. ? An appeals court overturned approval required for the construction of the Pirquenes coal-fired power plant, which is designed to have a capacity of 50 megawatts (MW). The tribunal termed the approval by the environmental authority as illegal because the authority granted permission without reviewing an environmental impact study (EIS). South World Business, the project's developer, has been asked by the tribunal to re-apply for approval and submit an EIS. The coaland biomass-fired project is estimated to take a construction period of 24 months, with a total investment of US$82mn. ? The Chilean Environmental Ministry has approved construction of the US$120mn Desaladora Sur desalination plant. The facility will be built by local water utility Aguas Antofagasta, with all of the city's potable water to be sourced from the process of desalination.

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The election of the first centre-right government in two decades has caused a pronounced shift in Chilean politics. Market-friendly policies and strong institutions have been the hallmark of the Chilean polity for the past few years, and we believe Sebastian Pinera's administration will continue to set the benchmark for political stability in the region as the country progresses towards developed economy status. That said, there is a risk that the political landscape could fracture over the longer term if the leading parties fail to reconnect with an increasingly disillusioned electorate.

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