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The S&P risk rating agency this Monday kept the note of the chile debt in ‘A + / A-1’, but changed the perspective to negative, due to the global crisis derived from coronavirus and the impact of social outburst.
“The economic crisis, combined with the impact of last year’s protests, has worsened the trajectory of Chile’s GDP,” said the credit agency, at a time when a global recession is expected.
S&P expects a 4% contraction in the Chilean economy this year and 4.6% growth next year.
The rating agency noted that the negative outlook indicates the risk of “a prolonged period of low growth after the 2020 recession.”
In any case, the agency maintained that “Chile’s floating exchange rate, fiscal and monetary flexibility, and institutional strengths should cushion the negative economic and social impact of the pandemic and the global recession.”
Along these lines, S&P added that “we hope that the basic pillars of Chile’s current policies, such as political checks and balances, a transparent and cautious framework for fiscal and monetary policy, and an autonomous central bank, will persist after the change in the Constitution”.
“However, the uncertainty created by this process could affect Chile’s medium and long-term economic growth prospects, as well as the government’s ability to contain potential fiscal erosion,” he warned.
Chile’s grade is in the middle zone of the investment grade, a coveted category because it facilitates the entry of capital.
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