The Forum for Fair and Sustainable Development, which brings together opposition economists and former officials, warned that Chile's economy could end this year with negative growth, according to Diario Financiero. The group made the assessment in a critical report on the first six months of President José Antonio Kast's government.
The nine-page document was prepared by the forum's Government Observatory unit. "Confidence indicators have not improved, with declines in economic activity bringing the economy closer to a recession," the text states.
The forum's members include Carlos Ominami, Osvaldo Rosales, Ana María Correa, Claudia Sanhueza, Paula Poblete, Ricardo Ffrench-Davis, Roberto Zahler and Stephany Griffith Jones. Several held positions in previous governments. Zahler, for example, headed the Central Bank.
The report acknowledges that external factors played a role. However, it says those factors were aggravated by "a poor diagnosis and performance" by the authorities, particularly the finance minister. The economists contrast the slowdown in activity with the more than US$30 billion in investment projects approved by the Environmental Impact Assessment System (SEIA).
One of the main criticisms concerns the Fuel Price Stabilization Mechanism (Mepco), the fund that cushions increases in gasoline and diesel prices. According to the forum, the government initially declined to use it during the war between the United States and Iran. That decision, they argue, generated a second inflationary shock, limited the Central Bank's room for action and contributed to the decline in growth.
The clearest indicator of the deterioration, according to the group, is unemployment. The unemployment rate stands at 9.6%, its highest level since the pandemic. The forum estimates that executing 100% of the public investment in the 2027 Budget would create around 30 thousand jobs, benefiting 3% of unemployed people.
The 2027 Budget bill also drew criticism. According to the report, it cuts social programs by nearly $800 billion, which the economists described as "a powerful signal regarding the sensitivity of the government's political approach." The newly approved Reconstruction and Reactivation Law, they add, will give more resources to major economic players "at the expense of the state's capacity."
The analysis went beyond economics. The forum estimated that "it is not unlikely that social protests will intensify" if unemployment persists, prices rise, benefits are restricted or disorder within the governing coalition grows.
Andrés Palma, a forum member, former minister of Mideplan (the former Ministry of Planning) and an academic at the University of Santiago, qualified the assessment. "We do not dare say there will be a recession this year, but the indicators tell us that we will probably end the year even with growth below zero," he said.
Palma said construction, commerce and industry are declining. He acknowledged that unemployment was already high before this government, but stressed that it has risen among people with professional qualifications. According to him, that had not happened since the days of PEM and POJ, the dictatorship's emergency employment programs in the eighties.
The Diario Financiero article does not include a response from the Ministry of Finance or the government to these criticisms. The report comes as the Cadem poll puts Kast's approval rating at 30%, its lowest level since he took office.
Palma welcomed the President's withdrawal of the constitutional reform on security, although he attributed it to pressure. The immediate debate will concern the 2027 Budget, which, according to the economist, "does not address the need to support job creation."
