Fiscal Balance in Chile
Monthly data suggests that the economy accelerated quarter on quarter in Q1, after returning to growth in Q4. The services and industrial sectors powered activity in the first quarter, more than offsetting a contraction in mining. However, the economy still declined year on year due to a challenging base of comparison. Our panelists see GDP contractions in both annual and sequential terms in Q2 on a softer labor market and the lagged effect of past monetary tightening. In politics, May elections for the council tasked with designing the new constitution saw right-of-center parties obtain an overwhelming majority, with the far-right Republican Party winning the most seats. As a result, the new text is likely to be business-friendly. However, the risk of the constitutional proposal being judged as too conservative—and subsequently rejected in the December exit referendum—has increased.
Chile Fiscal Balance Chart
Chile Fiscal Balance Data
|Fiscal Balance (% of GDP)||-2.8||-1.7||-2.9||-7.3||-7.7|