Question

In Chile, what are the consequences for the economy and businesses of the (violent) protests of 2019 and the subsequent promises of the government?

Answer 1

The protests alone could lead to decline in economic growth as businesses will shun away from investing in such regions, there will be less foreign investment which could impact businesses and ultimately government revenue in the long run. Even though the metro fare hike was reversed, there is greater military presence which could dent economic growth as governments all over the world will see the devastation of the turmoil.

Businesses will be wary of investing in such turbulent circumstances. Even though the government has promised subsidized pensions, insurance programs, monthly income, cancellation of electricity price hike, and higher tax rates for wealthy people. There will still be issues pertaining to job security and labour laws. In light of the virus outbreak this will further dent the economy as the government needs to spend on welfare schemes extensively.

Because of increased pressure on the government, there will be changes in legislation, wherein businesses will wait and watch what the interventions are, only then will they invest, after the virus fear breaks down. The economic growth rate is also expected to suffer as government will have reduced revenues because of the protests, which might lead to more unemployment at least till the government finds new ways of employment and subsequent pick up in investments.