Latin American elections

Financial markets and Latin American elections have traditionally had a rocky relationship. Mexico’s Tequila crisis in 1994 took place in an election year. The devaluation of Brazil’s real in 1999 came shortly after a presidential election. More volatility followed when Luiz Inácio Lula da Silva became president in 2002. Argentina’s debt default also took place in an election year.

Chile’s election is the first in this presidential cavalcade – and the victory of Sebastián Piñera, greeted by a rising stock market after 20 years of centre-left rule, will no doubt be cast as a sign the continent is now returning to the right. Perhaps. But the fact that Rodrigo García Pinochet, grandson of the dictator, failed to win a seat in Congress suggests otherwise. So does Mr Piñera’s desire to maintain the outgoing government’s fiscal stimulus, and to use subsidies to create new jobs.

His desire to sell a 20 per cent stake in state copper company Codelco is closer to the controversial “Chicago Boy” reforms of Chile’s past. The scale of that task nowhere approaches, say, part-privatisation of Mexico’s Pemex, which would require constitutional change. Yet it is still likely to get bogged down in Congress.

Rather Mr Piñera’s main challenges are more humdrum. It takes 27 days to start a new business in Chile, and more than four years to close one, over twice the average of Chile’s new OECD peers. If pedestrian really is becoming the new Latin American electoral reality, so much the better.