Chile’s inbound government foresees GDP growth

As Chile’s federal government changes hands from one political party to another in March 2018, the soon-to-be finance minister has predicted a boost in GDP growth for the nation along with the handover.

In a late January 2018 interview with the Santiago, Chile-based La Tercera, future finance minister, Felipe Larraín Bascuñán said the inbound administration will seek gradual reductions in business taxes in Chile, and will seek to cooperate with other political parties when attempting to revise some measures enacted by the previous administration.

In the interview, La Tercera asked Larraín if he stands behind an earlier prediction of 3.5 percent GDP growth in Chile for 2018. In his reply, he referred back to the previous term when inbound President Sebastián Piñera and the National Renewal Party led Chile’s government (from 2010 to 2014).

Stated Larraín, “We fell from a 5.3 percent annual average effective growth in the first government of President Piñera to 1.8 percent annual average in the current government. That is three and a half points of decline. Of these three and a half points, almost one point of decline is attributable to external factors and the rest is internal. Therefore, recovering growth is possible, and it is especially so when the bulk of the reasons for [the slowdown] are internal.”

He summarized his prediction by saying, “Growth can be recovered at levels around 3.5 percent per year; a somewhat higher range than the one [in place] today for 2018.”

Asked for more details about the uptick, Larraín pointed to “public politics of higher quality” that will create “confidence with the new government.” He also referred to “better external conditions.”

In terms of Chile’s global financial position, the incoming finance minister told the newspaper he would strive to improve damage to the nation’s credit rating that he said took place during the outbound Michelle Bachelet administration.