Boston, MA -- (SBWIRE) -- 07/23/2012 -- BMI View: Growth rates have returned to low single digits in 2012 following exceptionally high base rates in previous years. Compared with regional peers, 2012 year-on-year (y-o-y) growth of 2.8% is very positive. Growth will pick up in the longer term with an average rate of 3.6% per annum to 2020. The construction industry is expected to rise in value from US$18.6bn in 2012 to US$28.6bn in 2016.

Recent developments include:

- The Chilean Supreme Court ruled that the construction of the S$3.5bn HidroAysen hydroelectric power plant can proceed. The court ruled against seven appeals that were lodged against the project, which comprises five power stations. The facility is expected to produce up to 2,750 megawatts (MW) of electricity and will help Chile overcome a power shortfall. The Chilean government estimates that the country will need to increase its production capacity by 8,000MW by 2020 in order to meet rising demand. HidroAysen is a joint venture (JV) between Chilean power utilities Colbun and Endesa Chile.
- Chilean construction company Parque Eolico El Arrayan began constructing a wind farm on the Chilean coast. The 115MW facility, which will cost US$245mn, will be operated by AEI, Antofagasta Minerals and Pattern Energy Group. It will help to meet the Chilean government's target of producing 20% of its energy from non-conventional renewable sources by 2020, providing electricity for 200,000 homes.
- Spanish infrastructure company Albertis announced that it has signed a letter of intent to acquire 12 toll road concessions in Latin America from Spanish construction company OHL. The concessions, which are located in Brazil and Chile, include 3,569km of roads. OHL will in turn receive a 10% stake in Albertis, which is valued at EUR900mn (US$1.2bn). Albertis will subsequently become the largest toll road operator in the world, with a portfolio encompassing 7,500km.

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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 in recent years, and we believe the Pinera administration will continue to set the benchmark for political stability in the region as the country progresses towards developed economy status. 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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