Chile experiences accelerated growth.

The NASDAQ website picked up a June 21, 2007 story from the Dow Jones wires reporting that the Chilean Congress had approved a us$290-million measure to infuse cash into Transantiago, the transit agency responsible for the capital city's ailing, revamped bus and subway system.

Somewhat laconically the story said, "Passengers have experienced long waits and overcrowding on buses and on the subway. The problems ran so deep that they triggered a cabinet shuffle."

That's not all the problems triggered.

There were sporadic street riots, and the country's new President suffered a sharp drop in public opinion polls.

And according to a May 28, 2007 Reuters story, shoppers in Santiago had enough of a hard time getting to the stores that retail sales growth was weaker in March 2007 than they were in March 2006. In March 2007, sales grew 1.7 percent compared with 2.0 percent in 2006.

These problems aside, Chile is on track to post another strong year of growth.

A local economist quoted in a June 14, 2007 Bloomberg News report said, "The economy is energized." This is the good news. The bad news: "Later on, we're going to see more inflationary pressure from domestic demand."

But at the moment, inflation is under control. The International Monetary Fund (IMF) expects Chile's rate of inflation to increase no more than 2.5 percent in 2007. The Central Bank of Chile (CBC) targets the country's rate of inflation at 3.0 percent plus or minus 1.0 percent.

And at its policy meeting in mid-June 2007, the CBC decided to hold its key interest rate steady.

Healthcare and food prices, though, drove up the rate of inflation 0.6 percent in May 2007 when compared with April 2007. April 2007 inflation increased 0.4 percent over March 2007.

A June 7, 2007 Reuters report noted that a survey of local financial analysts showed an increase in forecast GDP growth for 2007. The analysts' estimate rose to 5.9 percent for 2007 compared with 5.7 percent previously forecast.

The IMF's forecast for GDP growth for Chile in 2007 is 5.2 percent. For 2008, the IMF estimates 5.1 percent growth.

Chile has been enormously successful in recent years in controlling inflation, and consequently enjoys a stellar reputation for macroeconomic stability.

The Governor of the CBC, in a presentation at the Bank of Rome on June 16, 2007, attributed Chile's success in taming inflation to the adoption of a floating exchange rate, highly efficient monetary policy, moving to an inflation targeting regime, and the enhanced autonomy of the CBC itself. It is worth noting that these macro efforts are market directed.

For Chile, however, the efforts are not a panacea. Unemployment is high-7.8 percent, and over 18 percent of the population lives below the poverty line.

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