The Central Bank foresees a fall in private consumption by six percent and a reduction of investments by 16 points.
Chile's Central Bank informed Wednesday that the country's Gross Domestic Product (GDP) could fall between 5.5 to 7.5 percent in the aftermath of the COVID-19 pandemic.
According to the report on Monetary Policy published by the institution, this contraction would be the biggest in 35 years.
The GDP is the market value of all final goods and services from a nation in a given year. It provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.
The calculation of Chile's Central Bank predicts an even worse scenario compared to the figures of the International Monetary Fund (-4.5 percent); the World Bank (-4.3 percent) and the Economic Commission for Latin America and the Caribbean (-4.3 percent).
Along with the contraction of the economy, the institution foresees a fall in private consumption by six percent and a reduction of investments by 16 points, in part because of the reduction of investments in non-mining sectors, high uncertainty, and the postponement of the implementation of big projects.
The report forecasts that the economy will begin to recover by the second half of 2020, and only towards the first semester of 2022, the activity levels will start to approach to those of the second have of 2019 when the GDP started plummeting.
The pandemic hit Chile while the country was reeling from widespread social unrest over inequality that broke out in October and contributed to GDP falling by 2.1 percent in the final quarter of 2019.
On Tuesday Chile's President Sebastian Piñera signed a bill that increases the emergency economic aid the government is providing the country's poorest amid the novel coronavirus pandemic.
Piñera said that the measure will reach 80 percent of Chile's poorest, or 2.1 million households, in the short term.
On May 19 demonstrators clashed with the police in one of the capital's poorest neighborhoods over the handling of the crisis.
As the economy contracts, thousands of people living in poor neighborhoods eat every day thanks to the 'common pots,' a solidarity mechanism that allows families to access some food. The most immediate memory of the 'common pots' dates back to the dictatorship in 1982.