Skip to main content


Cecilia Cifuentes, economist: “When the world is growing at 3%, the fact that in Chile we settle for 2% is worrying”
Thursday, April 4, 2024 - 11:30
crpédito foto Wbuild

Growth expectations in the South American country continue to be determined by the fight against red-tape when companies invest.

The elusive economic recovery in Chile continues to be the favorite topic of analysts and businessmen.

Although the Monthly Index of Economic Activity (Imacec) for February --which registered growth of 4.5% compared to the same month of the previous year-- was well received locally, the private sector, economists and academics continue to seek signals of a sustained recovery.

In this regard, Cecilia Cifuentes, economist and executive director of the Center for Financial Studies at the ESE Business School, believes that a distinction must be made between the short-term recovery and the trends shown by an economy like the Chilean one.

“I think this year we are going to grow a little more than 2%. The issue is that this figure should not leave us satisfied. When the world is growing at 3%, that we settle for 2% is worrying (...) because there are [also] social demands, the socioeconomic situation of many people, the problem of those who cannot enter the labor market ”said Cifuentes in conversation with AméricaEconomía. (That same Tuesday, the central bank raised the economic growth forecast to 2.5%)

To the economist, the question is how to recover a growth path. And there the triad of savings-investment, institutions and human capital stands out.

“We have a deficit in those three areas. In other words, savings-investment, we have to recover private savings and public savings; private savings have a lot to do with the capital market, with generating dynamism again in the capital market. The pension reform could contribute. Public savings, I believe that we have pending tasks in recovering long-term fiscal sustainability, which at this moment is a little threatened.”

In any case, Cifuentes ruled out that Chile is in a fiscal crisis, since the country remains fiscally responsible, “but we have a gap between income and spending that seems difficult to close. I think that here we must improve spending efficiency, attack informality. There are ways to collect funds, look at the issue of exemptions. In short, we have to close this fiscal gap,” she stressed.


The remarks were made during a seminar organized by the Chilean Fintech Wbuild, where Cifuentes participated along with former Minister of Economy Juan Andrés Fontaine. Both analyzed the recent measures adopted by the United States Federal Reserve (Fed) and their relationship with investment growth in Chile.

During the event, Cecilia Cifuentes elaborated on the optimism that exists about the US economy, despite the effects of the country's domestic political situation and geopolitics.

“Despite the tightening of monetary policy, economic growth estimates have been adjusted upwards, anticipating 2% growth this year. This panorama suggests a reduction in inflation without falling into a recession, a positive scenario for investors, since it indicates continuation in the development of projects and a rising consumption and that will also impact the real estate market," she explained.

For his part, Fontaine, who was Minister of Economy, Development and Tourism, and Public Works during the two governments of Sebastián Piñera, shared his vision on investment in the US, highlighting the persistent attractiveness of the stock market, even in the face of Fed interest rates increases.

“Robust productivity in the US, as a driving force behind the stock market dynamism, anticipates that future adjustments in interest rates could keep the stock market at favorable levels in the coming months,” he explained.

Both experts agreed that, as a key indicator of the economy, the real estate market is deeply influenced by the FED's monetary policy decisions. Interest rates play a fundamental role in the accessibility of mortgages and in the ability of buyers and investors to acquire real estate, highlighting the interconnection between the Fed's policies and the US real estate market.

Meanwhile, the IDB also published its macroeconomic report on Latin America and the Caribbean, addressing the main challenges the region will face in 2024 in the monetary, fiscal and financial fronts.

The document highlights that global growth of 2.1% in 2023 exceeded expectations by more than one percentage point. Global growth was a key driver in the economies of Latin America and the Caribbean.

Returning to Chile, the expectations of reactivation remain determined by the fight against red-tape ("permisología", in Spanish). That is, the excessive regulation and permits that companies require to invest, both economists highlighted.

And although it has not been an exclusive problem of Gabriel Boric's government, it is still at the center of concerns.

"It is an issue that has been going on for a long time, where perhaps this government has not introduced new obstacles, but it does get complicated, because there is a management problem that affects them," Cifuentes told AméricaEconomía. As an example, he mentioned an under-execution of the investment budget of US$ 2 billion last year.

This figure is the comparison of the investment spending that the government presented in the public finance report of September 2022, for the 2023 budget law and the effective expenses of 2023, which does not contemplate the subsequent adjustments introduced by the Treasury.

"What has happened in this government, and which has been negative, is that management has deteriorated," concluded Cifuentes.



Gwendolyn Ledger