CHILE – Takeaways from the general election

Participation in the run-off election is likely to hold the key to who succeeds Bachelet

The starting point: Nueva Mayoría governed with simple majority since 2014

President Bachelet has governed over the past four years with the support of the Nueva Mayoria coalition, which had a simple majority both in the Senate and in the lower chamber. The Nueva Mayoría included almost the entire left-hand side of the political spectrum, from the Christian Democratic Party to the Communist Party. Meanwhile, the opposition right-wing coalition Chile Vamos held 42% of both chambers.

As the election moved closer, and coupled with a new election system for parliament which encouraged the participation of new parties and coalitions, the governing Nueva Mayoria split into two. The majority of the parties formed La Fuerza de la Mayoria, while the Christian Democrats led the Convergencia Democratica. Meanwhile, the handful of parties which had been close to the administration but did not belong to the government and were close to the “social movements”, labeled the Frente Amplio coalition, tried to position themselves as an alternative to the traditional left coalitions.

There were eight contenders to the presidency. On the right, there were two candidates: former president Sebastián Piñera, supported by the Chile Vamos center-right coalition, and José Antonio Kast, who run as an independent. Meanwhile, there were six candidates on the left. Closer to the center was Carolina Goic, from the Christian Democratic party, while Alejandro Guillier’s Fuerza de la Mayoría coalition is composed by the majority of parties in the current governing coalition. Marco Enriquez-Ominami (PRO) went for his third attempt at the presidency. Further to the left were Alejandro Navarro (País), Eduardo Artés (UPA), and Beatriz Sánchez (Frente Amplio), each supported by new political movements. Polls ahead of the election showed Piñera, Guillier and Sánchez as the top contenders.

Did Chile move left or right in this election?

The surprises — in contrast to the last published polls — were two. Piñera obtained 37% of the votes, in contrast to 43% in the polls (average for polls published between September and early November), while Beatriz Sanchez, who earned 20% of the vote in the election, did not register more than 14% in the polls prior to the election. So once again, and like in so many other cases around the world in the last year and a half, polls failed to accurately record voters’ preferences. This time, however, the matter may not be attributed to voter turnout. This came in at 46%, in line with most estimates, and following the declining trend since the return to democracy in 1989.

 

At the presidential level, the election shows a polarized country, as candidates on the extremes of the political spectrum obtained significant support. Especially remarkable is the breakthrough of the Frente Amplio, which marks a difference compared to previous elections. In no election since the return to democracy had an outsider candidate obtained such a high vote in a presidential election.

However, moving to the composition of congress, the right-leaning parties did better than the corresponding presidential candidates, noticeably due to a positive performance of center-right parties Renovacion Nacional and Evopoli. With 47% of the lower chamber and 44% of the senate from 2018 to 2022 (one of the highest figures since the return to democracy in 1989, with the exception of the 2009 election), a potential Piñera government would probably have an easier time negotiating with moderate opposition members in order to get some legislation approved, compared to his first term’s experience. Nevertheless, the left coalition Frente Amplio boosted their presence in the lower chamber from just 2.6% to 13%, a significant increase in the weight of political parties on the far left of the spectrum. In fact, Frente Amplio will be the third largest politic al force, after the Fuerza de Mayoria, with 28% (or 37% when the Christian Democratic Party is included).

Evolution of the composition of Congress


So what about the run-off election?

On December 17, Sebastián Piñera and Alejandro Guillier will compete for the presidency. While surveys published prior to the first round election pointed at a tight race, Sunday’s result indicate the result will likely be closer than anticipated. On the right, José Antonio Kast (8% of the vote) has pledged his support to Piñera, lifting his potential support to 45%. On the opposing end of the spectrum, Marco Enriquez-Ominami (6%) and Carolina Goic (6%) have thrown their support behind Guillier’s bid, while Beatriz Sanchez’s Frente Amplio has yet to make a formal statement. While Frente Amplio is ideologically close to Fuerza de Mayoría, several important figures have expressed their concerns with forming part of a Guillier government, so their full backing is all but guaranteed.

Participation in the run-off election is likely to hold the key for the run-off election. If part of Sanchez’s backing chooses to abstain from voting (as a form of protest against the political establishment), it would lead to a fall in participation, and likely favor Piñera. A similar thing happened in 2013, when participation fell from close to 50% to mid-40’s as people saw Bachelet’s triumph as the baseline scenario. On the contrary, the 2009-2010 election was a more competitive bid, leading to participation staying broadly stable around 60%. If this is the case, Guillier would be better positioned to win the presidency. Consequently, the evolution of negotiations between Guillier’s camp and Frente Amplio in coming days will be key to the election’s outcome.

In the medium term

Higher global growth (supporting copper prices) and expansionary monetary policy will aid an activity recovery going forward. We forecast growth of 1.7% this year (2% for 2016) and 2.7% for 2018. However we note the outcome of the December presidential runoff and the debate over the reform agenda next year will likely influence confidence and, consequently investment and growth.

 

Miguel Ricaurte
Barbara Angerstein H.

Fuente: ITAU

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