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Significance
This would both constrain fiscal revenues and -- regardless of whether the proposed constitution is approved in a plebiscite on September 4 -- heighten pressure for increased social spending, particularly if currently high inflation is slow to subside.
Impacts
Uncertainties about the new constitution will undermine an already weak economic outlook this year.
Given high inflation, the Central Bank is widely expected to raise its interest rate by a further percentage point to 10.75% by December.
According to the IMF’s latest forecasts, Chile will lag all major Latin American economies on growth in 2023, at 1.5%.
Keywords:
Chile,
LA/C,
economy,
politics,
constitution,
exchange rate,
fiscal,
government,
growth,
investment,
monetary,
pensions,
prices,
protest,
referendum,
reform
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2022
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