As the prospect of a Pinera victory looms, many care more about what he won’t do, than what he will.
“We would expect upside potential from Mr. Pinera’s market-friendly approach and likely efforts to avoid reform that could interfere with the efficient functioning of the private sector,” Mario Castro, an analyst at Nomura, said in a report earlier this month. There was less mention of what reforms he would implement.>
Pinera’s first term in office may be a good template for his second. During that period, soaring copper prices pushed economic growth to an average 5.4 percent, cut unemployment, slashed the poverty rate and financed reconstruction after the 2010 earthquake. At the same time, a wave of student protests demanding better quality and free higher education made him one of the most unpopular presidents on record.
Ask people what his flagship economic policies were and many are stymied, eventually answering a reduction in bureaucracy to ease bankruptcy laws and enable people to set up a company in one day. The reforms facilitated growth, they weren’t transformative.
Now, he is pledging more of the same.
“We are going to banish the culture of the bulldozer,” Pinera said earlier this year, referring to the current government’s policy of overhauling the economy. “Bulldozers were designed to destroy, and we don’t want to destroy anything. We want to build.”
Still, Pinera’s election won’t open the floodgates to investment, said Felipe Alarcon, chief economist at EuroAmerica in Santiago.
Most of the investment will be limited to the mining industry, as copper prices rally, and construction, as the government steps up infrastructure concessions and new mines are built. With the peso also rallying, making local companies less competitive, other industries are unlikely to jump on the bandwagon.
Moreover, streets protests will probably return as Pinera reins in reforms that had boosted social-welfare provisions, Nomura said. That could raise concern that Chileans will turn against the right-wing coalition before elections in 2021, opening the door for a swing back to the left -- and possible a more radical left.
Give it a year or two, and industry may be using the next election as an excuse for not investing.
As Gemines said in a report this month summing up the 2017 election, “the great dilemma that faces the country is who will govern from March 11, 2022.”
Source : https://www.bloomberg.com/news/articles/2017-11-13/chile-businesses-await-return-of-billionaire-with-midas-touch