Banco Central de Chile on Dec.5 slashed its growth prospects for both 2019 and 2020, as the lingering effects of social protests continue to undermine economic activity.
Central Bank President Mario Marcel presented before the Chilean senate the bank's latest report.
The regulator cut its 2019 GDP growth forecast to 1% from between 2.25% and 2.75% previously, while lowering its 2020 expectation to a range of 0.5% to 1.5% from 2.75% to 3.75% earlier.
The economy is expected to fall by as much as 2.5% in the current quarter.
Marcel said that the "social crisis" that erupted in mid-October generated "important changes" in the macroeconomic scenario. He argued that the magnitude of its impact can be compared with "some of the strongest shocks" in Chilean economic history.
Chilean CDS, a widely used measure of sovereign credit risk, has already risen by over 60%, putting at risk its position as Latin America's safest place for bond investors.
He argued that diminishing social unrest through 2020, as well as a gradual economic recovery, could pave the way for the relative normalization of the economy in 2021.