Chile’s $300bn a year economy that has been running at a rate above 3% YoY is now expected to shrink as early as this quarter due to widespread and violent demonstrations in the capital.
Key economic movers such as retail sales and small businesses have scaled back, shutting the door on the activities that make up 50% of the country’s employment. Other parts of the economy have met a similar fate as agriculture and manufacturing are both predicted to shrink by 2% and 1%, respectively in 2019.
If the unrest continues, and given this is a no-leader unrest makes that possible, Chile will not be able to escape recession in 2020 given as much as 300,000 jobs could be lost due to the current political and social crisis. Protestors are now demanding a 50% rise in pensions, according to the Minister of Finance Ignacio Briones, which is something cannot be afforded at this point.
The financial markets’ positive momentum returned after the U.S. reported that new home sales rose by 3.8% to 1.31mn in October and building permits rose to 5%, which is the highest gain since 2007. Multifamily starts also rose by 8.6%, and permits gained 8.2%.
The optimistic data is giving hope that property sales will remain solid over the next six months given the current low rates and encouraging activity seen in all segments in housing.
Markets are keenly waiting for this week’s data on existing home sales, which will confirm the pace of the U.S. housing momentum in the.