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Moody's Analytics sees lower growth for Chile amid social unrest

The growth forecast for Chile this year could drop to between 2.2% and 2.3% from its current 2.5% estimate, the director for Latin America at Moody's Analytics, Alfredo Coutiño, reportedly told Diario Financiero.

"Definitely, the closing of shops, the suspension of transportation, the interruption in the provision of goods, and the insecurity in the streets which affects jobs, will have an impact on the economic activity in October," he was quoted as saying.

Coutiño also suggested that given increased risk in the country and faced with the possibility of higher inflation, "it would be prudent for the central bank to maintain the benchmark rate unchanged," while he did not rule out the possibility of even raising the rate to prevent capital flight.

In a separate statement, Moody's said given a less favorable international environment, "the protests represent an additional element to consider, which could bring the growth rate below 3% in 2020."

Meanwhile, Chile's credit default swap prices spiked by more than 10% during Oct. 21, as the markets reacted to the growing political uncertainty and massive protests that erupted around the country, which were triggered by a hike in transportation fares.

The Chilean government, which had declared a state of emergency on Oct. 19, extended the measures on Oct. 21 as protests spread throughout several cities.