February 22, 2010
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News: Chile Pulls Out of Recession
As the United States (U.S.) citizens continue to reduce credit card spending that could have a possible negative effect on the economy, other countries are seeing signs of economic recovery. A report released by the SBIF, Chile's bank regulator, showed that the nation's credit card transactions increased for the 4th quarter to $2.02 billion; a 19 percent increase from same time last year. Chile's credit card transactions include cash advances and service fees. Along with most of the world, Chile fell into its worst recession since the 1990's. The credit card spending increase is a long needed relief to the gross domestic product which is expected to grow as high as 5.5 percent in 2010. Aggressive monetary policies and a strong fiscal stimulus package helped to jump start the economy. The Central Bank of Chile slashed the base interest rate to an all time low of 0.5 percent as part of a $4 billion stimulus package that was released by the Chilean Government last year.
The top four credit card networks; MasterCard, Visa, American Express, and Diners Club all reported increased transactions. Although the number of Visa's credit card transactions in Chile topped the list, in regard to the total CLP's, MasterCard was number one. MasterCard transactions totaled CLP529.64 billion, followed by Visa at CLP481.60 billion, American Express at CLP38.60 billion and Diners Club with CLP18.40 billion. In terms of lending, Chile's Banco Santander-Chile had the highest number of transactions with the Banco de Chile coming in second.
At the end of January, Chile's SBIF reported that the nation's banking sector rose significantly in December; up 14.1 percent from November. Foreign credit card transactions help to boost the increase. The SBIF report showed that Chile's total loans increased by 3.42 percent in December up from the previous month. However, due to new accounting standards, the agency was not able to give comparative information for year end. They were able to say that the Chilean banking system posted a profit of about $2.4 billion for the total 2009 year.