Chile unveils $5.5b stimulus plan as economy shrinks

Chile launched a massive $5.5 billion stimulus package after data showed its economy contracted 3.4 percent in October – the largest year-on-year drop in a decade – as widespread social unrest continues.

The package unveiled by Finance Minister Ignacio Briones on Monday includes boosting 2020 public spending by $3.03 billion, to support small, medium and large businesses.

Another $525 million are earmarked for other initiatives like the renovation of the metro system in Santiago, which has sustained serious damage since protests erupted on October 18.

“Estimates show that this agenda will generate 100,000 new jobs next year,” Briones said.

But the measures will mean a real increase in public spending next year of 9.8 percent as compared to 2019, pushing the fiscal deficit up to 4.4 percent of gross domestic product.

The government announced the stimulus measures after the central bank reported the worrisome GDP figures for October.

The 3.4 percent drop was far greater than the 1 percent decrease anticipated in official estimates, and represented the economy’s worst performance since 2009 at the height of the global economic crisis.

Protests broke out across the country on Monday night, the 46th consecutive day of demonstrations. In Santiago, protesters gathered in the Plaza Italia, a main hub for the city’s rallies, and dozens of young people broke into different metro stations.

Protests initially erupted in mid-October over metro fare hikes but quickly escalated into the most severe outbreak of social unrest since the end of the dictatorship of Augusto Pinochet in 1990.

Furious Chileans have taken to the streets to protest social and economic inequality. Businesses have remained closed during the period of unrest, public transport came to a halt, and many people worked shorter days.

At least 23 people have been killed, including five at the hands of security forces, and more than 2,000 were wounded.