Challenges and opportunities: the Chilean economy seeks sustainable growth.

The Chilean economy, recognized in the 1990s as the "jaguar of Latin America," is currently facing one of its greatest challenges: achieving sustained growth amid an uncertain international context and an internal landscape that has fluctuated between hope and pessimism. From an average growth rate of 4.3% per year between 2005 and 2014, current projections from the Central Bank suggest that Chile's Gross Domestic Product (GDP) could expand by only between 2.25% and 2.75% in 2024, and even more concerning, an average of 1.8% over the next decade. Hermann González, an economist at the Latin American Center for Economic Policies, has observed how expectations have drastically changed in the past year. Initially, it was thought that Chile could recover quickly after a slight contraction in 2023, but the figures from the second quarter were disappointing, adding to the uncertainty. The modest GDP growth, which will barely reach 2.5% this year, departs from the figures recorded in previous years and reflects a palpable economic weakening. However, the recent publication of the Monthly Economic Activity Indicator (Imacec) has brought some relief. This indicator showed a 4.2% increase in July, the fastest pace in two years. Despite this positive data, experts warn that it is a temporary effect and should not be interpreted as a trend change. Vittorio Corbo, former president of the Central Bank, points out that, despite the momentary joy, the Chilean economy contracted on an annual basis and continues to face a complicated outlook. The government of President Gabriel Boric seems to remain optimistic in light of these projections. Finance Minister Mario Marcel has praised the recovery in July, suggesting it could be a sign of stronger growth in the coming quarters. This optimism is supported by the recent reduction in the Central Bank's benchmark interest rate, which has fallen to its lowest level since January 2022, potentially stimulating economic activity and investment. Nevertheless, behind this slow growth lie deeper structural difficulties. González emphasizes that productivity, capital stock, and labor participation are key factors that need improvement if sustainable growth is to be achieved. Education and training of the workforce are areas that require urgent attention, as they are fundamental to increasing competitiveness. Additionally, Corbo mentions that the investment climate has deteriorated, making it difficult to approve vital projects for the economy, especially in strategic sectors like mining. The processing of permits has become cumbersome, hindering initiatives that could revitalize the Chilean economy. Despite this situation, Corbo highlights that Chile is not in a macroeconomic crisis, thanks to a robust financial system and a Central Bank committed to stability. Promises of more robust growth have begun to resonate in the political arena. During a recent national meeting, President Boric urged citizens not to settle for 2% growth and to strive for more significant expansion. This call for optimism was supported by the mayor of Providencia, Evelyn Matthei, who also advocated for growth that exceeds the global average. However, former Undersecretary of Finance Alejandro Micco warns that the shift in perspective regarding economic growth must be a cross-cutting concern across the political spectrum. If economic growth becomes the central focus of public policies, it could be the first step toward genuine recovery. Nevertheless, the effectiveness of this change will depend on collaboration between the government, businesses, and society as a whole. Finally, economists agree that economic stagnation can translate into social tensions. The lack of sustainable growth could lead to widespread discontent, similar to that experienced during the social upheaval of 2019, which had its roots in years of stagnation. To prevent popular dissatisfaction from resurfacing, it is vital to implement policies that improve the quality of life for citizens, offering prospects for development and economic opportunities. Chile's recent history demands a strategic shift that allows the economy to be redirected toward a more prosperous and equitable future.