Latin America Advisor

Mariana Zepeda, Latin America analyst at FrontierView: “A few short-term factors are driving Chile’s faster-than-expected 2021 rebound: an aggressive vaccination campaign, sky-high copper prices and expanded fiscal stimulus. However, Chile is not out of the woods. On the Covid-19 front, risks remain that new variants could disrupt Chile’s emergence from the pandemic despite high vaccination levels. While higher mobility levels are bound to bolster economic activity in the second half of this year, fiscal stimulus will eventually fade out and with Chileans largely tapped out on pensions savings, consumption levels should begin to moderate. Export revenues from copper are likely to slow into 2022 as well, further raising fiscal risks. This means Chile will need private investment to continue to bolster its recovery momentum and propel labor market recovery, which has stalled in recent months. But an uncertain political environment may complicate that investment recovery. Chile is entering a pivotal moment…”