• Chile: Chilean leftist Mr. Gabriel Boric wins Presidential election with a wide margin


On Sunday, December 19, the leftist candidate Gabriel Boric (35) won the presidential election against the right-wing candidate, José Antonio Kast. With a solid majority having won 55.9% of votes, Mr. Boric will become the next president of Chile, taking office in March 2022. Preliminary data by Chile’s Electoral Service (Servel) showed a significant increase in turnout, especially in the lower-income districts. In this context, turnout reached 55.6%, with 8.3 million people, a historical record since voting was made voluntary.

The financial market has reacted by internalizing a scenario of structural reforms in pensions, health and education that will require an increase and redistribution of significant public spending in the coming years. This is how the president-elect's program contemplates a tax reform that would try to collect 5% of GDP in the next 4 years, which is considered ambitious and could require higher levels of public debt. According to the market, debt would increase at 50% of GDP or more to 2026, which is 11 percentage points more than the base projections of the Budget Office for the same year without reforms and considering fiscal convergence.

Initial market reaction: depreciation of the Chilean peso (CLP), losses in the stock market and rises in interest rates, as expected.

Polls prior to the elections showed some diffusion, but in general, they previewed a victory for Mr. Boric. In this context, the result is not a surprise and financial assets had partially internalized this electoral result in recent weeks. The main surprise is the wide gap in votes relative to the opposing candidate Mr. Kast’s, which exceeded all projections. Faced with this broad support for the president-elect, the degree of uncertainty remains high and could only decrease given certain milestones over the coming months.

Looking ahead, there are milestones that could provide greater certainty and that we consider relevant to monitor. In forming the new government, it will be key to know the ministers responsible for the economic area, especially the Minister of Finance, who will be in charge of carrying out the pension reform and presenting the tax reform to the new Congress. We also consider it important to monitor the behavior, proposals and support of the Constituent Assembly in the face of an exit referendum that, for now, will take place in July 2022.

—Jorge Selaive, Anibal Alarcón, & Waldo Riveras  


This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. Neither Scotiabank nor any of its officers, directors, partners, employees or affiliates accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or its contents.

These reports are provided to you for informational purposes only. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any financial instrument, nor shall this report be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or be in the process of acquiring or disposing of positions, referred to in this report.

Scotiabank, its affiliates and any of their respective officers, directors and employees may from time to time take positions in currencies, act as managers, co-managers or underwriters of a public offering or act as principals or agents, deal in, own or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to securities or related derivatives. As a result of these actions, Scotiabank may receive remuneration. All Scotiabank products and services are subject to the terms of applicable agreements and local regulations. Officers, directors and employees of Scotiabank and its affiliates may serve as directors of corporations.

Any securities discussed in this report may not be suitable for all investors. Scotiabank recommends that investors independently evaluate any issuer and security discussed in this report, and consult with any advisors they deem necessary prior to making any investment.

This report and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced without the prior express written consent of Scotiabank.

™ Trademark of The Bank of Nova Scotia. Used under license, where applicable.

Scotiabank, together with “Global Banking and Markets”, is a marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its affiliates in the countries where they operate, including; Scotiabank Europe plc; Scotiabank (Ireland) Designated Activity Company; Scotiabank Inverlat S.A., Institución de Banca Múltiple, Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Casa de Bolsa, S.A. de C.V., Grupo Financiero Scotiabank Inverlat, Scotia Inverlat Derivados S.A. de C.V. – all members of the Scotiabank group and authorized users of the Scotiabank mark. The Bank of Nova Scotia is incorporated in Canada with limited liability and is authorised and regulated by the Office of the Superintendent of Financial Institutions Canada. The Bank of Nova Scotia is authorized by the UK Prudential Regulation Authority and is subject to regulation by the UK Financial Conduct Authority and limited regulation by the UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority are available from us on request. Scotiabank Europe plc is authorized by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority.

Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V, Grupo Financiero Scotiabank Inverlat, and Scotia Inverlat Derivados, S.A. de C.V., are each authorized and regulated by the Mexican financial authorities.

Not all products and services are offered in all jurisdictions. Services described are available in jurisdictions where permitted by law.