Business distrust in Chile: investment falls and economic future uncertain.

The recent report from the Central Bank of Chile, corresponding to the August 2024 edition of the Business Perceptions Report (IPN), reveals a discouraging outlook in the country's business environment. Through 537 valid surveys and 37 interviews, the document reflects a state of uncertainty that has been consolidating over the years within the Chilean economic context. Although many companies anticipate slightly better or similar results to those of 2023, the general sentiment is one of caution, which translates into a scarcity of significant new investment projects. Since its creation in 2013, the IPN has witnessed an almost endless cycle of pessimism and distrust in the economic environment. Expectations have fluctuated, but overall, they have been characterized by prudence. The reports from 2020, in particular, stand out due to the level of uncertainty they reflected, highlighting the impact of the social outbreak and the subsequent pandemic. Business leaders are increasingly skeptical about the possibility of a change in this trend. In the latest publication, the Central Bank also reported that Gross Fixed Capital Formation, which represents investment, fell by 4.1% compared to the same period the previous year. This figure is alarming, as it marks four consecutive quarters of contraction. The situation is even more concerning considering that it is projected that, for the first time in four decades, investment will end the year with a decline after finishing the previous year without growth. Gabriel Ugarte, a researcher at the Public Studies Center (CEP), highlights in his analysis that, over the past ten years, investment has grown at a rate lower than that of the economy, leading this component to represent less and less of national production. This decline is not only a symptom of a lack of business confidence but also raises serious questions about the country’s economic future. The structural premises behind this trend are complex and require a deep analysis that takes into account the factors that have contributed to the loss of dynamism in investment. Authorities often urge looking to the future with optimism, suggesting that a change in perception could activate a growth cycle. However, it is essential that these invitations to hope are accompanied by an acknowledgment of the current reality and the responsibilities that both the state and the private sector have in fostering a conducive environment for investment. In this sense, an approach is necessary that considers not only potential future flows but also the accumulated liabilities that the Chilean economy has built over the years. The lack of significant investments can have direct repercussions on employment, on citizens' incomes, and, consequently, on tax revenue, which largely depends on the production capacity of companies. The concept of the "missing link" becomes relevant in this analysis; the Chilean economy seems to lack a connection that unites the various productive forces, thus allowing for sustained and balanced growth. The absence of robust investments translates into stagnation that could turn into a vicious cycle, where the lack of growth generates even less investment. It is evident that the current situation cannot continue to be ignored. Public policies must be reevaluated and designed with an approach that considers the structural reality of the economy. This implies not only promoting short-term investment but also creating a sustainable environment that encourages long-term growth. The invitation is to foster an open dialogue between the public and private sectors, where the challenges facing the country are recognized and joint solutions sought. Only in this way, and with a coordinated effort, can this trend begin to be reversed and ensure that Chile regains its path toward solid and sustained growth, benefiting all Chileans.