Centre-right politician ‘Sebastián Piñera’ has been elected as Chile’s President recently.
What is significance?
Chile is undergoing rapid political transformation, due to the recent introduction of proportional representation system.
This has effectively ended the two-party dominance characteristic of the past 3 decades and accelerated the assertive emergence of leftist politics.
Notably, the left drives its support base from the new middle classes that shot to prominence during the South American commodities boom of past decade.
The new government is expected to prioritise the establishment a constituent assembly to draft a new Constitution as promised.
Also, Mr. Piñera’s victory raises expectations of the country’s return to the robust economic performance, which currently below 2%.
What would be the foremost challenge?
Chile’s mining lobby wants regulations on permits to be eased, in order to capitalise on global demand for copper – a major export commodity.
Mr. Piñera also promised easing labour regulations and reducing corporate taxes in the run-up to the elections.
While fulfilling these promises will be key to reviving growth, it won’t be easy as the leftists hold a sizable strength in the congress.
As the middle class have been vouching for further improvements in welfare programs, it would be difficult to curb spending in areas like education.
Hence, Mr. Piñera will have to walk a tightrope between the competing demands of the businesses and the social welfare programs.
What is the emerging trend in Latin America?
With Mauricio Macri as President in Argentina, Mr. Piñera’s return signals a further consolidation of the centre-right in Latin America.
This rightward political swing is expected to spread across the region, as governments scheduled to face the electorate are mired with problems.
Economic consolidation is a critical priority in the region, as effects of the plummeting commodities markets in recent years is still being felt.
