A skyrocketing inflation, a pension system undercapitalized and exacerbated inequality after the pandemic: the next president of Chile He will lead a country that ceased to be the “oasis” that it was before October 2019, when the most serious protests erupted since the dictatorship.
The seven candidates who will compete on November 21 to reach La Moneda (presidential headquarters) cover a very broad political spectrum, ranging from an extreme right that seeks to minimize the role of the state and cut taxes, to an extreme left that wants to expropriate mining companies, going through more moderate positions that pursue a welfare state.
The polls, with little prestige after the last electoral appointments, predict that neither will win in the first round and that the two most likely to fight in the December 19 ballot are Gabriel Boric, from the leftist Frente Amplio, and José Antonio Kast, of the far-right Republican Party.
Experts, however, ask that Yasna Provoste (center) and Sebastián Sichel (ruling right) not be defenestrated so quickly, as they are the most uncertain elections in Chilean democracy and there are still 50% undecided.
“It will be a very difficult 2022, with a projected growth of only 2% per year and in a context of decrease in fiscal transfers and withdrawal of monetary stimuli, which implies higher interest rates,” explained Francisco Castañeda, director of the Business School at the Universidad Mayor.
In parallel, a convention made up mostly of progressive citizens is working hard to draft a new Constitution before July that enshrines the solidarity of the State and replaces the current one, inherited from the dictatorship and of a neoliberal court.
Alejandro Micco, an economist at the University of Chile and former Undersecretary of Finance, said that the great challenge is “to maintain certainty regarding the future of the country’s economic policy” so that there are no effects on “country risk or rates.”
In the same vein, the president of the Chilean great business community, Juan Sutil, spoke last week: “Investors pause their decisions until they are certain. And this is exactly what we have seen in recent months ”.
“Inclusive reactivation”
The pandemic caused GDP to plummet 5.8% in 2020, the biggest drop in four decades, and a loss of nearly two million jobs.
The recovery, however, is being faster than expected: in the second quarter of 2021, GDP registered an annual growth of 18.1%, the largest jump since there are records, and the unemployment rate fell to 8.4 in September. %.
The Central Bank of Chile expects GDP growth of between 10.5% and 11.5% for this year and, for 2022, of up to 2.5%.
For Recaredo Gálvez, of the progressive think-tank Fundación Sol, “we must promote a reactivation that is not precarious, that is the great challenge for the Government and for Parliament”, because in addition to being president, Chileans will choose deputies and the half of the senators.
Copper, of which Chile is the world’s largest producer, has largely driven this recovery and will continue to do so, although we must be “vigilant” about the slowdown in the Chinese economy, warned Gálvez.
The red metal reached its maximum price of US $ 4.86 per pound on May 10, even surpassing the records of the “super cycle” of 2011, and the Chilean Copper Commission (Cochilco) estimates that it will close 2021 with an average value of US $ 4.2 the pound.
The prestigious economist Ricardo Ffrench Davis, National Prize for Humanities and Social Sciences, assured that Chile must tackle the endemic inequality that caused the wave of protests of 2019, because only then will there be “certainty and social peace”
In terms of inequality, he assured, “we have regressed in these two years, with obstacles such as having lost almost US $ 50,000 million of pension savings.”
“It’s silver has been liberalized: critics of neoliberalism are doing neoliberalism when they say they want their money to handle it themselves,” added Ffrench Davis, who proposed increasing the tax burden in 2022 and taxing only once those who earned more in the crisis.
Chile, a pioneer in Latin America in individual capitalization, has allowed three early withdrawals of 10% of the funds, paying more than US $ 48,000 million.
Most candidates agree that the system offers very low pensions and that it requires a change.
Inflation, headache
Inflation, experts agree, could be one of the next president’s main headaches.
The greater liquidity due to social benefits (more than US $ 35,000 million) and pension withdrawals have taken it to historical records: the Consumer Price Index (CPI) reached 13.1% in October, its highest annual level in over 13 years.
The Central Bank, which estimates that inflation could close the year close to 6%, aggressively raised the benchmark interest rate to 2.75% in October, accelerating the withdrawal of the monetary stimulus that had begun in July.
For Castañeda, inflation is “dangerous”, but the upward trend is also being seen in other parts of the world due to “energy shortages, disruption in global supply chains, negative effects on agriculture or financial and economic bubbles. real estate ”.
.
Ricardo is a renowned author and journalist, known for his exceptional writing on top-news stories. He currently works as a writer at the 247 News Agency, where he is known for his ability to deliver breaking news and insightful analysis on the most pressing issues of the day.
