Chilean political stability: 6-month outlook



Since 2019, Chileans have periodically taken to the streets and protested against a myriad of government policies. Chileans recently elected Gabriel Boric by a narrow margin, but rejected his proposed constitutional amendments in a referendum in September. Meanwhile, the Chilean economy is taking a difficult path to recover from the pandemic, which is further aggravating discontent in the country.

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KJ-1: There is a realistic probability that the Chilean government will enact constitutional reforms within the next 6 months.

  • President Boric has proposed a constitutional referendum as a way to resolve the country’s endemic political polarization and social discontent Grey Dynamics.
  • Lack of political experience and technical knowledge among Constituent Assembly members contributed to unpopular draft constitution Grey Dynamics.
  • Opposition lawmakers are backing a new draft and President Boric has held several meetings in a bid to relaunch the process Grey Dynamics.
  • Boric reorganized his cabinet after losing the vote to broaden the scope of coalition participation Grey Dynamics.
  • Support for a new constitution looms large among Chilean voters who dislike the Pinochet-era document currently in place Grey Dynamics.
  • The United Nations Regional Human Rights Office for South America is helping the government draft the new document Grey Dynamics.
  • Under the UNHRROSA assistance programme, the UN organizes seminars and public hearings aimed at facilitating greater stakeholder participation in the process. Grey Dynamics.

KJ-2: The Chilean economy is likely to perform badly over the next 6 months.

  • So far, foreign direct investment in Chile has exceeded the 5-year average, however, the inflow fell by 14% in the first half of the year. Grey Dynamics.
  • Overall, it seems that FDI is decreasing in the second half of 2022 Grey Dynamics.
  • The slowdown in FDI is linked to the uncertainty surrounding the constitutional process Grey Dynamics.
  • The Central Bank of Chile forecasts an overall drop in FDI of 3.3% in 2022 and 4.7% in 2023 Grey Dynamics.
  • The Chilean economy will grow slightly by the end of 2022, but is expected to contract by no more than 1.5% in 2023 Grey Dynamics.
  • The government is trying to alleviate the grim situation with tax breaks for foreign companies, especially those involved in mining Grey Dynamics.
  • The price of industrial metals fell by 17%. Copper fell 6% to $7,560 a tonne Grey Dynamics. Chile is the world’s largest producer of copper, with an average of more than 28% of world production Grey Dynamics.
  • The fall in the price of industrial metals coincided with a slowdown in manufacturing growth in China and still high global energy prices Grey Dynamics.
  • China recorded lower GDP growth than the rest of Asia for the first time since 1990, impacting dependent economies such as Chile Grey Dynamics.

KJ-3: It is likely that Chile will continue to experience widespread protests over the next 6 months.

  • The Piñera government cracked down on protesters in 2019, leading to widespread abuses by security forces Grey Dynamics.
  • Chilean police fired rubber bullets into the crowd, causing eye injuries. Eye patches have become a symbol of the protest movement Grey Dynamics.
  • Unrest in Chile has led to the highest number of recorded eye trauma cases in the world Grey Dynamics.
  • Following the loss of the constitutional vote, students took to the streets and closed several metro stations Grey Dynamics.
  • The students also demanded far-reaching social reforms to tackle growing levels of inequality in Chile as well as education reforms. Grey Dynamics.
  • The new constitution was intended to address land and water rights for Chilean citizens and address the widespread abuse of Chile’s water supply by agricultural companies. Grey Dynamics.
  • The need for comprehensive environmental reforms became evident when the two main rivers in the Petorca region dried up Grey Dynamics.
  • Lake Aculeo completely dried up in 2018 following siphoning for water-intensive agricultural projects Grey Dynamics.
  • The situation has become so desperate that emergency tankers are delivering water to communities across the country. Grey Dynamics.
  • The run-up to the referendum has been full of misinformation, such as the claim that the new constitution would ban bottled water, highlighting the central role water plays in the decision-making process for many people in Chile. Grey Dynamics.

Information deadline September 29

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