Business & Economy

Chilean markets tense as poll changes course of the nation

(Update 1: changes head and lede, adds details, edits throughout)

By Ruben Figueroa

Santiago, May 17 (EFE).- Chile’s markets reacted adversely Monday to the results of the constituent polls, while many citizens celebrated the 155-strong body elected to draft a new constitution, which includes minimal representation of conservatives.

The Santiago Stock Exchange ended the day down 9.3 percent, the biggest drop since the state of emergency was declared for the pandemic in March of last year, while the exchange market also reacted pessimistically and the Chilean peso passed from 700 to 716 units per dollar, the worst record for the local currency in the last 11 months.

The black Monday contrasted with the optimism of many citizens who celebrated the results and the opportunity they may represent to build a country with greater social justice.

“I hope that the irruption of the independents is a favorable change. We don’t want the same people as always and that can be seen reflected in the voting,” Chilean citizen Marcela Acevedo told EFE.

Another inhabitant of the capital, Fernando Gomez, said he hoped to see the constituent assembly conduct its business in a “focused and calm way” to make possible the “deeper changes that Chile is seeking.”

Experts such as the director of Universidad Mayor’s business school, Francisco Catañeda, said that “there is no doubt” that “changes are coming” and that they represent “a window of opportunity” but “also a risk for the economy,” both for large business groups and small and medium-sized companies, whose “financing is going to become more expensive.”

“Possibly all this context can accelerate the outflow of capital, which is obviously going to affect the stock market and the dollar, and there will be some more inflation. I see a complex economic situation one year from now,” he said.

Castañeda added that the results of the elections left Chile “under tension” and that what is expected is “certain maturity” in the constituent body to “reach the necessary social agreements and advance in reducing the gaps,” but maintaining “the productive and entrepreneurial force.”

The Chilean right aspired to achieve at least a third of the representation in that body, a percentage that would have given it the ability to contain the scope of the changes and veto power to prevent the new Basic Law from embodying norms opposed to its tenets, but it only obtained 37 seats.

With this breakdown, the path was cleared so that the big winners of the election, the independent candidates of a mainly progressive bent, can draw with the left-wing opposition a model of a nation that takes into account their concerns, with a strong social justice component.

With its 48 seats, the independents hold the key to change, but they will not be able to do it alone, as they do not reach two thirds of the representation.

Large negotiations to approve the provisions of the new constitution could be the norm, given the heterogeneity of all the lists that achieved representation, an element that could limit the scope of the changes.

The convention will start work from the end of June and will have a maximum of 12 months to draft the constitution, a time for debate that will take place under the watchful eye of the public and also the markets. EFE


Related Articles

Back to top button