The Chilean Government, as a resort to the current protest, announced plans to invest $ 5.5 billion for the economic recovery of the country on Monday, December 2, 2019. The protest has already affected the country’s economy, which is likely to hamper Chile’s economic growth during the current fiscal year.
Citing the needs for an “ambitious budgetary policy”, Chile’s Finance Minister, Ignacio Briones explained that the economy recovery budget would focus on building infrastructure and funding small- and medium-sized enterprises.
Economy Shrinks Since the Protest Intensifies
The public unrest in Chile was started by a small group of people against the Government’s policy of increasing metro fares on October 18, 2019, which quickly escalated and turned into a mass protest.
The protest has affected the country’s economy of $ 1.5 billion; as a result, the Chilean Peso fell drastically due to the non-performing of many central banks. According to a report by the Central Bank, “The economy shrank 3.4% in October from the same month a year ago, marking the worst contraction in a decade.”
The protest not only declined non-mining activity by 4% but also impacted various sectors including transportation, business services, hotels, and restaurants. The protest has also led to the death of 26 people.
Indicating to the worst impact of the protest, Briones expects the country’s economic growth to remain stagnant in the coming months. The country’s current fiscal fell from 2% to 1.4%.
Denying the claim and expecting sudden economy recovery, Briones stated that Chile’s economic growth for the next financial year would be around 1% to 1.5% instead of 2.3%.
He further explained in a News Conference, “These aren’t just numbers. This means thousands of companies and jobs today are at risk… The violence, the looting, and the destruction have halted the economy with enormous costs for Chileans”.
Budget for More Employment and Revival of Small Enterprises
The Government will spend $ 2.4 billion out of the total budget in building infrastructure, which would help in creating more employment and benefit small businesses.
Moreover, the Government plans to spend increase its investment budget by up to 9.8% for the next fiscal besides its current deficit of 4.4% of gross domestic products (GDP).
In order to handle the expected GDP deficit for the next year, the government plans to sell its currency bonds around $ 3.5 billion to foreign companies to meet the financial needs. In addition to the plan of economic recovery, the Government will initiate a policy reform to crackdown the looting of public properties during the protests.
I’m a business journalist, working with multiple news outlet. I love to talk and analyze the market and current business news. Feel free to drop me a note if you like my reporting or if you wanna grab a coffee and have some inside news for me
You can always reach out to me at [email protected]