Chile Constitution Progress Remains Slow

Chile's overall risk remains at medium-low. Center-left President Gabriel Boric is governing Chile without major support from the Congress, and therefore, not much legislation has been passed during his mandate, which began in March 2022. After the major protests seen in 2019, discussions for a new constitution have begun. A proposal for a more social-democratic constitution was rejected in 2022, and more recently, one more center-right was again rejected. As a result, no further attempts to approve a new constitution will be made during Boric's mandate, which spans until 2026. Although, both the opposition and the government do not have the best of relationships, both sides have been playing by the constitutional rules. Chile has also not seen major events of social unrest and protests. Political violence risk is set at medium-low. Legal and regulatory risks are also medium-low, as no major changes in the current pro-market Chilean economy are expected in the medium-term. Similarly, political interference risk is set at medium-low, as we see both sides of the political forces in Chile respecting each other.  It is very likely that Gabriel Boric will continue to govern Chile until the end of his mandate but is unable to promote major changes in Chilean legislation.   

On the economic front, the country has seen lower growth compared to its pre-pandemic trend, but the usual fiscal discipline of the Chilean government has been maintained by the current administration, although there has been some deterioration in the latest months. Therefore, the inability of the government to provide stimulus has risen to medium. In Chile, the central bank has started to cut interest rates as inflation has slowed. Overall, the banking system is in a strong position; thus, banking sector vulnerability risk is set at medium. The risk of doing business in Chile is set at medium-low due to pro-market regulation, which has not been changed yet.