Gabriel Boric, President of Chile, continues pushing for a new Chilean Constitution that would allow for a more equitable distribution of wealth. Meanwhile, more and more foreign investors are pulling out of the country.
It is estimated that over US$50 billion in foreign capital have fled the country since 2019. The number grows significant under the concerns of a recession for Chile this year.
Investors have been frightened by reports that, under the new Constitution, tribal groups could gain the power to approve or reject mining projects. Chile is known globally as a major provider of minerals, with copper and zinc being among its top exports.
Other reports point also to a an exodus of wealthy Chileans, as well as local firms scaling down operations.
Este 4 de septiembre serán ustedes queridos compatriotas los y las protagonistas de la decisión histórica en torno a nuestra Constitución Política.
Lee la propuesta de nueva Constitución en https://t.co/M64iJhq8hI pic.twitter.com/dvQWp786Ub
— Gabriel Boric Font (@GabrielBoric) July 5, 2022
All of these concerns come at a time when the central bank is steadily raising interest rates as part of its fight against inflation, which topped 13.7% in September 2022.
Chile’s economic crisis has been put at the feet of Boric’s government, which has threatened to impose heavy taxes on the country’s wealthiest.
To complicate matters further, China’s economic slowdown is putting a dent in Chile’s export earnings.
Rating agency Fitch warned in a note to investors that a lack of economic stimulus amid political uncertainty could tip Chile into a “shallow recession” in 2023.