Chile: Chile sails into unchartered waters after turbulent spring

Country-wide protests have rocked Chile since mid-October, weighing on the economic outlook of Latin America’s long-time poster child. 

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Economic activity crashed to an over one-decade low in October, while both the peso and consumer sentiment slumped to all-time lows in November. The social unrest has already considerably dampened short-term prospects and the uncertainty surrounding the promised rewriting of the constitution could also significantly alter the longer-term outlook. After nearly three decades of relative stability and impressive economic growth, Chile is now heading into unchartered waters. 

Looking ahead, our Consensus Forecast sees Chile’s economy growing 2.2% next year. However, underlining the sheer uncertainty of Chile’s outlook, the spread among our panelists’ projections range from 1.3% to 3.0%. Whether or not President Sebastian Piñera can defuse the protests with the new constitution, and whether or not investors take flight at the new spending promises, will have a significant bearing on Chile’s outlook.

 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinion of FocusEconomics S.L.U. Views, forecasts or estimates are as of the date of the publication and are subject to change without notice. This report may provide addresses of, or contain hyperlinks to, other internet websites. FocusEconomics S.L.U. takes no responsibility for the contents of third party internet websites.

Date: December 23, 2019

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