Chile's Economy To Contract by 6 Percent in 2020

The Organization for Economic Cooperation and Development (OECD) reported that Chile's economy would shrink by 6 percent at the end of 2020, amid the COVID-19 pandemic and its deepest recession since 1982.

RELATED:

Chile: New Day of Protests Ends Amid Police Brutality

The OECD latest report points out that unemployment has decreased by an unprecedented 25 percent of the labor force without a job. Nonetheless, inflation "remains contained due to the strong contraction of demand," the study noticed.

Moreover, the COVID-19 pandemic has turned Chile into one of the countries with the highest number of deaths per million inhabitants. Most of the cases concentrated in the capital Santiago while the state of emergency was extended until 2021.

The OECD estimates a GDP growth by 4.2 percent in 2021, driven mostly by private consumption and a gradual recovery of the labor market. However, the organizations confirm that increasing public spending will be necessary for the economy to bounce back. In a previous report, the Economic Commission for Latin America and the Caribbean also warned about these measures.

"Additional public investment, especially in education, the lifelong learning system, active labor market policies, and digital and transport infrastructure, would help strengthen the recovery further," the OECD report explains.