La Moneda’s 2024 Growth Forecast Falls Flat: What Went Wrong

This Monday it was known the Monthly Indicator of Economic Activity (Imacec) for September, which is 0%, quite a bit lower than the estimates that put it around 0.8 and 2%, therefore Mario Marcel, the Minister of Finance, acknowledged that La Moneda’s goal of achieving growth of 2.6% will not be met.

“Although we may have improvements in the following months, the activity lost in that month is not regained. So, with this figure what one can say is that the 2.6% growth we expected for this year will no longer be possible,” said the Secretary of State in a press conference.

Marcel noted that “we are going to update our projections once we have the quarterly figures. Obviously the differences aren’t going to be huge, but we want an update that is more informed.”

Despite these figures, the Executive backed up its criticism of “poor prospectors,” as stated by Labor leader Jeannette Jara.

“We must remember that some opposition analysts expected last year that we would have negative results, which did not happen, and “This year, positive results are predicted, by the way, which we would all like to see even more growth, but which is happening in a context in which we have been restoring and normalizing the country.” said the Secretary of State.

A weak labor market and regulatory environment: the reasons for low growth

George Lever, Research Manager of the Santiago Chamber of Commerce, He pointed out that the factors that explain this Imacec of 0% and the reduction in economic growth expectations “point to the high interest rates that continue despite the process of cuts made by the Central Bank, labor market weakness, under pressure from an increasingly complex regulatory environment, investment weakness, falling productivity, and an external context with mixed signals.”

Lever added that, in terms of labourl, threats continue to come from the legislative and regulatory front, with more than 15 initiatives that could further increase high contracting costs, so “we insist on the need to evaluate these effects and their accumulation responsibly, because they represent the main factor behind the decline that the ability to create jobs in the economy has suffered.”

For his part, From the Chamber of Mines of Chile, its president Manuel Viera, asked the Executive Committee for a new version of decree 600, which was created in 1974 and which allowed foreign investors to request the signing of an investment contract with the Treasury, where it is possible to pay capital in order to stimulate the injection of resources in the productive and service sectors.

Along with this, Viera argued that “the authorities should analyze the possibility of a tax reduction, as is done in Peru, inviting an audit, which is the main step and in addition to a high financial risk to find possible deposits, we already lost 10 years and we have no new brownfield projects.”