The Chilean economy at its hardest time (II)

As its has been the case for all the world economies , chilean economy has been hardly hit since March 2020 because of Covid -19.But before that, there was also underway the effects of the worst social unrest in years which started out in october 2019.So within a six months period (October 2019 -March 2020), the chilean economcy had to cope with emergency policies twice.So, the requirement is also that much of a complex.In both cases, public expenditure has been on the rise,increasing external debt and risking the standing of its credit rating.GDP long run potential growth has decreased to 1,5%% (down from 2%), real unemployment (counting people under labor law protection),is at the level of 1982 crisis,and the risk of loosing ten years of poverty reduction gains, is right in front of policy makers.So, it is still unclear the lasting social impact of covid 19, in terms of higher demand for better public health policies,infrastructure needs, as well as reshaping social policies. What is is becoming increasingly clear is that the economy will evolve toward a different format, the one based on higher service technology whether it is consumption ( on line demand,delivery logistics,e-commerce), work (remote working),leisure (wider range of cell phone aplications),firms (both automation and automatization are on the rise),value added (digital networks).All of these transformations almost against the clock, will require flexibility, innovation flows, adaptation and cooperation from every one involved.Thus, the question is how the current status of the chilean economy, match this expected scenario?. It is useful to check what was the situation up to the beginning of 2019. Chilean economy GDP per cápita was USD 26.000 (IMF,2018) with expectations to get in 2022, closer up to 60% that one of Spain, and 80% that one of Greece , (measured a purchasing power parity). The institutional macroeconomic framework, has been a benchmark to sustain long run economic growth signals, (low inflation, financial sector lined up with Basel III agrements, and a reliable monetary policy), such that to keep expectations of getting back economic growth, as soon as the covid-19 worst effects are under control.However, the problem is that the only way to get fully of such control, is with a vaccine.In the mean time, the prospect for a recovery to be sucessfull will work on a step by step format.This means that the level of deterioration in productive fundamentals (investment, employment,) will have adjustment lags to get back to its full recovery status. Thus, given its macroeconomic fundamentals, Chilean economy model, is still plenty of potential. In fact with poverty rate still among the lowest in Latin America, it reinforce the middle class relevance, which is considered to be a stability factor, especially about the implications of the upcoming event of a referendum to be held next october 25Th, concerning the approval or not of working out an improvement in the constitutional framework set in 2005. The key problem for the chilean economy is in its microeconomic foundations. This was the main input which led to the civil unrest of october 2019.When these foundations are weak , it is like to drive a car with at least one of its tires almost flat. Sooner or later, the trip will stop either when the passenger or the driver, realizes that something goes wrong.In the Chilean case, the passengers realized faster than the driver, that the trip was not even close to where it was expected to be.