Elections in Chile: What the results could mean for the economy
Chileans will head to the polls on 19 November to choose a new president, amid a political panorama in flux. While the right is united behind Chile Vamos candidate Sebastian Piñera, the multi-billionaire former leader, the left has rarely looked more divided and will field three candidates in the first round. As a result of this fractured scenario, the policy options on offer to citizens are extremely broad; this is best highlighted by the leftist candidate Beatriz Sanchez, who is proposing a break with the largely consensual, market-oriented policies pursued since the restoration of democracy in 1990. However, the country looks set to opt once more for the known quantity of Piñera, who is expected to pursue a business-friendly agenda.
To examine the elections—and particularly Piñera’s program—in more detail, we speak to Maria del Pilar Cruz, Senior Economist at the Santiago Chamber of Commerce, who regularly participates in our Consensus Forecast panel.
María del Pilar Cruz Novoa is a Commercial Engineer at the University of Chile and currently serves as senior economist at the Chamber of Commerce of Santiago (CCS). She has a long history in the field of economic analysis, economic research and economic evaluation and in the evaluation of industries. Co-responsible for the economic analysis proposed in the matter of agendas of public policies for development and the generation of economic opinion guidelines of the CCS. She was awarded in 2016 and in 2017 with FocusEconomics' Top Analyst Forecast Award for the most accurate economic projections for Chile.
FE: Which candidate has the best program for the economy?
What jumps out when analyzing the presidential candidates’ programs is the extremely broad range of policy areas tackled in each of them, which makes for a highly dense and complex spectrum of proposals. Each candidate assigns a different priority to economic growth, while other topics such as education, pensions, poverty, infrastructure, the environment, health, decentralization and security are also covered.
Rather than a question of which program is better or worse, it is clear that the candidates diverge over their vision for the country’s development over the coming years. The left and center-left propose a move towards a social welfare state of rights and guarantees. This contrasts sharply with the preponderant view up until now of a social market economy where the state provides a helping hand.
FE: What would a victory for Sebastian Piñera mean for Chile's economy?
A victory for Piñera has already been largely built into firms’ expectations, and business confidence has seen a notable rebound before November’s presidential elections. Forecasts point towards faster growth in 2018 and 2019, thanks to a healthier international panorama and a domestic economic agenda more oriented towards economic growth.
The center-right candidate has a program which sets out a detailed pro-growth strategy, with an emphasis on innovation, entrepreneurship and competitivity. The program also refrains from proposing significant changes to the constitution, which would accentuate the uncertainty which has dominated the business environment in recent years.
There is a deliberate aim to increase investment in both the country’s physical and digital infrastructure, as well as increasing the economy’s potential growth rate. Fiscal responsibility is a central aspect of the program, to which end the candidate proposes a simplification of current regulation and banks on higher revenues through faster economic growth.
FE: How do you evaluate the policy program recently set out by Piñera? Is it realistic, and could it be financed without adding to the fiscal deficit?
The program has a cost of USD 14 billion, the equivalent of a little over 5% of annual fiscal expenditure […]. As a result, the program would put pressure on the budget, not only in terms of the allocation of current public spending but also because it may be challenging to accelerate the country’s growth rate.
FE: Is Piñera's stated aim of doubling economic growth feasible?
Increasing the country’s potential growth rate by around one percentage point isn’t an impossible task, but it would require some key advances; improving productivity, which has fallen for several years, boosting investment which has been dampened by weak business confidence and the complex environmental approval process, and improving the quality of education and training. All these areas are clearly set out in his program, but carrying them out will depend to a large extent on the political ability to get concrete laws through parliament over the next four-year presidential term.
Chile Economic Outlook from FocusEconomics
The economic picture is slowly brightening, with business and consumer confidence surging in September and economic activity expanding at a solid pace in August. In addition, copper prices are on a roll, providing the economy with a welcome caffeine injection and giving the government more fiscal space. This allowed President Bachelet to announce in early October a 3.9% spending increase in the 2018 budget, which was more than analysts were expecting.
If you'd like more Consensus Forecasts and written analysis from FocusEconomics, download a free sample of one of our FocusEconomics Consensus Forecast reports by clicking on the button below.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: November 13, 2017
TagsAsia Commodities Base Metals Commodities Investment Iran Colombia Infographic Major Economies India Argentina Emerging Markets Venezuela Japan Agricultural Commodities Oil Economic Growth (GDP) Greece Vietnam Exchange Rate MENA IMF Energy Commodities Healthcare Banking Sector Company News UK Brexit G7 oil prices Turkey Gold Spain European Union Ukraine China Bitcoin Eastern Europe Nordic Economies Housing Market Forex Italy Cryptocurrency Trade Russia Euro Area USA OPEC South Africa Germany Consensus Forecast Precious Metals Commodities Tunisia Latin America Australia Brazil precious metals Mexico Unemployment rate France Portugal Canada Inflation Africa United States Sub-Saharan Africa TPP United Kingdom
In FY 2018 economic growth in India should accelerate thanks to fading disruptions from the demonetization of Novem… https://t.co/4C9xYnZLQf
2 hours ago
Economic growth in Sub-Saharan Africa is set to accelerate in 2019. Get more details: https://t.co/J6UhL4HDEf
5 hours ago
Despite mounting economic headwinds, the Chinese economy is expected to comfortably meet this year’s growth target… https://t.co/uePHyDNwaK
7 hours ago
7 hours ago
Looking ahead, growth should be robust across ASEAN. Get the latest 2018 and 2019 growth forecasts for major player… https://t.co/A9A2jYONnH
8 hours ago
- Which ASEAN countries are most exposed in the event of a U.S.-China trade war?
- 75 Top Economics Influencers to Follow
- Emerging Markets Economic Outlook 2018 and 2019
- The Faces Behind Latin America’s Key Institutions
- 2019 Economic Outlook for the Top Oil Producing Countries
- Is your cup of coffee about to get more expensive going in to 2019?
- The Economic Implications of an Aging Global Population
- Can the Wisdom of the Crowds predict the results of the 2018 World Cup?
- Railway Mania: The Largest Speculative Bubble You’ve Never Heard Of
- From Riches to Rags: Have Cryptocurrencies Crashed for Good?
- Investment looks to Latin America, but forecasts are not encouraging
- Turkey: Erdogan has cemented his grip on power - now what about the economy?
- Mexico: A look at the past, present and future as elections yield AMLO victory
- How can Latin America’s business environment benefit from technological change?
- Italy’s New Populist Government and the Eurozone: Prelude to a Crisis?
- Latin America moves toward increased integration as U.S. protectionism grows
- How can Latin America increase productivity without affecting the quality of employment?
- How will Saudi Arabia's economy benefit from lifting the women's driving ban?
- Which countries are the most prepared for the upcoming digital revolution?
- India Under Pressure from the U.S. on Trade Policy
- The Story of Steel
- Latin America is the World Leader in eCommerce Growth Despite Serious Challenges
- What the TPP means for trade in Latin America
- Elections in Russia: Analysis and Implications
- Nearly a Third of Latin Americans Have No Right to a Pension
- A Look at Healthcare Models Around the World
- The Poorest Countries in the World
- Newly-elected Chilean President Sebastian Piñera faces a myriad of challenges - economic and otherwise
- The Economic Effects of Trade Protectionism
- Regional Disparity: The Dark Side of Inequality in Latin America
- Coal: The story of the world's most abundant fossil fuel
- Venezuela's Electoral Conundrum
- Gold: The Most Precious of Metals (Part 3)
- Trump's 1st Year: 95 Analysts Surveyed on U.S. Economy
- The Latest on China and What's in Store for 2018
- An in-depth look at the Eurozone’s booming economy and the challenges that lurk in the shadows
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- How will emerging market economies perform in 2017?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Russian economy update in wake of OPEC deal announcement
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit