translated from Spanish: Moody’s projections following Chile’s new “social contract” setup

Chile will recover in 2022 the level of economic growth lost last year due to the impact of the coronavirus pandemic, although the political changes that the country is living in generates uncertainty about performance in the medium term, a report by Moody’s said.
The qualifier expects a strong recovery this year – with an expansion of 6% – plus greater fiscal space to which the high price of copper will contribute, while debt rises at a slower pace than expected.
“Chile is going to recover the lost level of GDP in 2022 and this is relevant because just a few months ago gdp that was lost in 2020 was not going to recover until the end of 2022”, ariane Ortiz-Bollin, analyst at Moody’s, said during a webinar of the agency.
In the medium term, growth will go to levels of 2.5-3.0%, according to the agency.
However, the analyst noted that current political changes could lead to greater “noise” and signals will have to be expected on the issues that will be prioritized in drafting the country’s new Constitution.
“We see more medium-term pressures that have to do with the new configuration of the social contract in Chile after the outcome of the elections, which are confirming that there is an important shift to the left but above all to a new way of doing politics”, he said.
According to Ortiz-Bollin, these changes will complicate the agenda of the country’s new president who will be elected at the end of the year.
“It will be much more difficult for anyone in government (…) to define what those public policy priorities will be given this important reconfiguration that is taking place.#8221;, he noted.
The analyst noted that the country still has a debt space to meet the demand for resources from possible changes to social rights in the country, but will also have to look for permanent sources of funding.

Original source in Spanish