S&P lowers Chile to negative

S&P said it revised the outlook on the Republic of Chile to negative from stable.

The agency also said it affirmed the AA- long-term and A-1+ short-term foreign-currency ratings on Chile and the AA long-term and A-1+ short-term local-currency ratings.

The AA+ transfer and convertibility risk assessment is unchanged.

The outlook revision reflects the risk that prolonged low economic growth could translate into larger fiscal deficits than currently expected, leading to continued high increases in government debt, weakening the sovereign's financial profile, S&P explained.

This also could contribute to an erosion in the country's external position, the agency said.

In 2016, S&P said it estimated that Chile's GDP increased 1.8%, down from 2.3% in 2015 and lower than initial expectations.

Low copper prices led several companies to cut production. This, coupled with subdued business confidence, weighed on investment and constrained economic growth, the agency said.

In 2017, S&P said it expects economic growth to pick up only slightly to 2.2%, largely as a result of consumption, together with stronger exports as global copper prices recover.

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