December 26, 2012 / 8:30 PM / 7 years ago

UPDATE 2-S&P raises Chile's credit rating to AA-minus

* Ratings agency cites resilience in face of global woes

* Officials in top copper exporter raise growth forecasts

* Gov’t says upgrade vindicates economic policies

By Anthony Esposito

SANTIAGO, Dec 26 (Reuters) - Standard & Poor’s raised Chile’s sovereign credit rating a notch on Wednesday to AA-minus from A-plus, citing the export-dependent economy’s resilience to fallout from the global slowdown.

The upgrade makes investor favorite Chile the highest-rated sovereign in Latin America and puts it on an equal footing with countries including Japan, New Zealand and Taiwan, Finance Minister Felipe Larrain said.

“This is a great honor for Chileans because it’s i nternational backing f or t he economic management and fiscal policies we’ve developed,” he sa id i n a statement, adding that the revision should further lower borrowing costs.

Announcing the upgrade, Standard & Poor’s highlighted the Chilean economy’s solid performance despite an uncertain international panorama.

“The upgrade reflects the growing resilience of the Chilean economy that in turn continues to improve the government’s capacity for countercyclical policies in the face of an external downturn,” it said in a statement.

“We also expect the government to continue making gradual progress on microeconomic reforms to bolster the long-term competitiveness of the economy,” it added, warning that an unexpectedly sharp drop in Chinese growth could still result in a severe drop in copper revenues.

The ratings agency also revised its outlook for the economy of the world’s No. 1 copper producer to “stable” from “positive.”

Chile’s economy has fared better than expected despite slowing demand from top trade partner China and fallout from the euro zone’s debt crisis on the back of brisk domestic demand, healthy prices for main export copper and strong investments.

Earlier this month, Chile’s central bank hiked economic growth forecasts and scaled back inflation projections for both this year and next as buoyant domestic demand and investments are seen remaining firm.

Economic growth is seen cooling slightly to between 4.25 percent and 5.25 percent in 2013. That would mark a fourth straight year of sturdy growth.

Gross domestic product is expected to expand 5.5 percent this year, after growing 6 percent in 2011 and 6.1 percent in 2010.

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