Experts Analyze Economic Scenario Facing Chile’s Incoming Government

March 08, 2022

At the beginning of March a group of economists came together to analyze the economic challenges to be faced by the incoming government of Chile’s President-elect Gabriel Boric, who will assume office on March 11.

The webinar, sponsored by the Santiago Center, Columbia’s Latin American Business Association (LABA), the Institute of Latin American Studies (ILAS) and the Columbia Business School Chile Alumni Association, took into consideration high inflation, rising interest rates and a record public debt of 36% of GDP.

The panelists included Claudio Soto, Chief Economist at Banco Santander Chile; Andrea Tokman, Chief Economist at Quiñenco S.A.; Jorge Mariscal, Professor at Columbia SIPA; and Hernán Frigolett, Researcher at the Center for Regional Development Studies (CEDER) and an academic at Universidad de Santiago de Chile (USACH).

To begin with, Santander’s Soto reviewed the macro-economic scenario for the incoming government, where public financing is limited and debt has increased, he said, encouraging an orderly fiscal adjustment. In turn, Quiñenco’s Tokman examined the local labor market, considering pre-pandemic trends including labor migration from goods to services, a skills gap between offer and demand, high informality and lower productivity, versus trends during the pandemic including a weakened services sector, increased gaps and informality, and complex demographic changes. Public policy will play an important role considering a new government, a new congress and the constitutional convention, she noted, calling on companies to lead in adapting to these changes.

Then, Mariscal provided notes on financial markets, noting that the Chilean peso is still about 10% below its value from one year ago when compared to the US dollar, underperforming peers. To wrap up, Frigolett reviewed fiscal perspectives for the years 2022-26.

The webinar was chaired by Karen Poniachik, Director of the Santiago Center.