Conjoncture

Conjoncture

    Conjoncture - 12 October 2022
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    Gabriel Boric, the candidate of the very broad left-wing coalition, won the second round of the presidential election last December. He took office in mid-March, and is already facing numerous challenges. His general policy speech at the beginning of June, and then the tax reforms he brought forward at the end of June, have confirmed his intention to implement economic and social policies which differ from those of previous governments. His ambitious objective for his term of office is to begin a rapid "green transition", but also to find the "right balance" between the need for reforms in favour of greater social justice and the need to remain "fiscally responsible". The dynamic growth seen during the last three decades has been accompanied by a fall in poverty, but some inequalities persist. When it comes to social justice, expectations are therefore very high. At the same time, the government will have to deal with a fragmented parliament and fragile coalitions, which do not guarantee he will find it easy to implement his economic and social programme. The project for a new constitution agreed after the autumn 2019 protests promised to overhaul the rules on social justice, the distribution of powers, and the energy transition. Ironically, it was rejected in the referendum that took place on 4 September. However, the debate is not over yet, and discussions on the drafting of a new document have begun. In this context, raising the growth rate (which was on a downward trajectory before the Covid epidemic), and consolidating the public finances while keeping promises to reform the education, healthcare and pension systems are set to be major challenges.
    Conjoncture - 26 July 2022
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    Over the next five years, French economic policy will have to continue to deal with structural issues, such as full employment, the delay of companies in terms of robotisation, the competitiveness of companies and the place of industry. It will most likely also continue to focus, at least in the short term, on supporting household purchasing power, as it has done since 2019. These projects, which will have to be carried out in parallel, will have to be reconciled with the cost of the ecological and energy transition against the background of public debt that has already risen sharply and interest rates that are moving higher, albeit in a controlled way.
    Conjoncture - 19 July 2022
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    The economy of Algeria was already in a precarious position in 2020 when it had to cope with the double shock of the Covid-19 pandemic and lower hydrocarbon prices. Since then, the situation has improved thanks to the rise in global oil prices and strong demand for gas in Europe. For the first time since 2014, the country should be able to post current account surpluses in 2022-2023, and then accumulate FX reserves. The risk of a balance of payments crisis in the short term is receding. But macroeconomic stability remains fragile as prospects for recovery are modest and public finances are structurally in deficit. The implementation of reforms is a priority to prevent economic troubles in the event of a new oil shock.

On the Same Theme

Chile: rejection of the draft constitution 9/6/2022
In Chile, a large majority of voters (nearly 62%, with an exceptional voter turnout) rejected the draft new constitution in the referendum held on 4 September. The draft, which contains almost 400 articles, did not propose a profound reform of the Chilean economic model; the Central Bank had to remain independent, while property and labour rights were not called into question. But it guaranteed better access for the population to a set of social rights (housing, education and access to healthcare), whereas the State currently only pays for those needs not covered by the private sector. This meant a substantial and long-term increase in public spending. However, the debate is not over yet: a very large majority of the population and all the political parties expressed themselves in favour of a new constitution, and at the very least the amendment of the current constitution. From before the referendum, President G. Boric (elected last December) paved the way for the establishment of a new constitutional assembly. Several solutions are possible (new assembly, “mixed” assembly, composed of newly elected representatives and deputies, or an assembly composed only of deputies who have already been elected) and discussions should start in the next few days. The rejection of this draft goes beyond the strictly constitutional framework. The number and extent of the reforms proposed by the government for the remainder of the mandate will have to be reduced. The rejection of the draft constitution has been relatively well received by the markets. Since mid-July, the currency has appreciated continuously, while the “no” victory led in the polls. The medium-term outlook remains mixed. The political climate should remain tense throughout the mandate, and investment decisions could be postponed once again, while considering the country’s growth potential.
Chile: new president takes office 2/18/2022
Gabriel Boric, candidate of a vast left-wing coalition, won the second round of the Chilean presidential elections, last December. He will take office in March and his government will have a full agenda. Regarding economy, growth has slowed down since 2015.  
Chile: Challenges aplenty for the new government 12/21/2021
Gabriel Boric, the candidate heading up the very broad left-wing coalition, won the second round of voting in Chile’s presidential election on 19 December, beating J. Kast, the far-right candidate. While the country’s economic fundamentals have held up relatively well over the past two years, the incoming administration (taking office in March) will have to deal with a number of very thorny issues. Chile’s health situation, high inflation and restrictive monetary policy will be a drag on growth in the short to medium term. What’s more, expectations among the country’s population are very high concerning pension system reforms, access to healthcare and education. The new constitution, currently being drafted, is expected to contain an extensive social chapter, which will push up public spending significantly over the long haul. The new government will have to walk the tightrope of meeting these expectations with a divided parliament (all reforms will require compromises and coalitions), while adopting a “fiscally responsible” approach to contain the growth in debt during its term in office.
Growth bounces back in Chile 6/15/2021
The improvement in global growth prospects and the success of the vaccination campaign have helped sustain the recovery in Chile’s growth seen since Q3 2020, despite the reintroduction of relatively strict health protection measures in the early part of 2021. Household consumption grew strongly and is likely to continue to drive growth, boosted by stimulus measures and the opportunity given to a large number of employees to draw on their pension savings. In all, GDP is likely to grow by 6% in 2021, after a 5.8% drop in 2020. This said, the risks are on the downside. External risks relate mainly to trends in the pandemic and progress in vaccination on a global level. Domestic risks centre on the debate about rewriting the constitution (a process likely to last until mid-2022) and the campaign for the presidential election in November 2021. These factors could depress the outlook for both domestic and international investment.
Chile : 2021 forecasts 12/11/2020
We expect a gradual resumption of growth rather than a real rebound in 2021 in Chile. Presidential election and the drafting of the new constitution will continue to fuel the political debate.

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