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Chile: a return to cruising speed

Latest economic projections for Chile indicate growth of between 10.5% and 11.5% for 2021 - around two percentage higher than was forecast in June. This boom has been driven in the first instance by a massive injection of liquidity into the country via three withdrawals of 10% from pension funds and via the social aid packages that the government has allocated until December 2021. Impetus has also been provided by the global industrial reactivation and by sky-high copper values.

But this has also come at a cost in the form of rate hikes, devaluation of the local currency and particularly pressure from inflation, which is set to reach 5.7% by the end of 2021. At the same time, this excess liquidity and general feelings of relief have translated into greater difficulty for companies to hire workers, thereby raising all costs along the chain.

With Chile having achieved one of the world’s highest vaccination rates, the pandemic is under control here. Political decisions - in many cases, populist - are likely to become a considerably bigger risk than the pandemic over the next few years. With the presidential elections towards the end of the year, this situation will probably become even more accentuated.

The recycling sector has performed surprisingly well. Despite some problems, the industry appears to have been immune to the worst effects of COVID and is continuing to operate against all odds. The biggest concern at present among exporters is obtaining the vessel space necessary to keep flows moving while ridiculously high freight rates have broken all records.

The massive wave of liquidity in Chile has generated explosive domestic demand, with producers operating at 100% or more. This has undoubtedly fuelled the recycling and waste management industry in virtually every sector. The global industrial reactivation has pushed up demand for recyclable materials and, when added to very high commodity values, is continuing to provide solid support for our industry.

Many suggest that a time bomb is ticking in Chile. Unbridled consumption at the cost of savings and public spending, political pressure for the presidential race and the development of a new constitution with a strong social character are emerging as the factors that will determine the future of the country over the coming years.