Chile’s struggle for a new direction

In October 2019, Chile experienced its most serious social upheaval since the end of military rule. A seemingly minor increase in Santiago’s metro fares sparked widespread protests, rapidly escalating into nationwide unrest driven by deep-rooted social and economic inequalities.

Despite Chile’s international image as a prosperous and stable economy, the protests revealed significant structural issues, including expensive education, inadequate pensions from the privatised system, and limited access to quality healthcare. Politicians across the spectrum quickly promised a new constitution, replacing the one created under Augusto Pinochet’s dictatorship in 1980, which entrenched neoliberal economic policies and limited the state’s role in social welfare.

Constitutional setbacks

President Gabriel Boric’s government attempted to address public frustration by overseeing two constitutional referenda, but neither succeeded. The first referendum in 2022, led by progressive factions, proposed reforms including recognition of indigenous territories, judicial restructuring, and expanded social rights. It was decisively rejected by 62% of voters who saw the measures as excessively ambitious and financially unrealistic.

A second attempt in late 2023, spearheaded by conservative groups, also failed. Although Boric was not leading this second attempt, his vocal support for constitutional change made him an easy target for criticism. His administration ultimately bore much of the blame, significantly weakening both his credibility and the standing of Chile’s centre-left.

Silver linings

Even though it failed to push through these critical constitutional reforms, Boric’s administration did see some notable successes. Under his leadership, Chile’s economy regained stability after a period of high inflation. Inflation, which had peaked at 14% in 2022, decreased to approximately 3% by the end of 2023. Predictions suggest continued normalisation. This stands in contrast to many neighbouring South American countries, where inflation remains a major challenge. The government also kept a tight grip on spending, keeping public debt below 45% of GDP, outperforming many similar economies.

The country’s services export sector also grew, benefiting from Chile’s geographical location, relatively low costs, and alignment with US business hours. Additionally, recent political changes in Argentina offered improved prospects for regional trade integration.

Chile has also stepped up efforts to diversify its economy, with a focus on mining and energy infrastructure. Investments surged in lithium extraction and seawater desalination. At the same time, renewable energy projects, especially in solar and wind, show strong potential, but outdated transmission infrastructure remains a bottleneck. Streamlining permitting processes and updating energy infrastructure remain key steps for future progress. Long-term opportunities, such as green hydrogen, also emerged as promising sectors for sustainable economic development.

Pension overhaul

The Boric administration’s standout achievement was a comprehensive pension reform, approved by Congress in January 2025 after decades of stalemate. This reform stands out as a notable legacy achievement for Boric. The reform resulted from broad political consensus, including support from moderate right-wing parties, and significantly enhanced the fairness and sustainability of the system:

It addresses the gender gap by ensuring equal pensions for men and women with comparable savings. Contributors who meet a minimum number of years will also receive additional monthly payments.

The state pension, known as the Universal Guaranteed Pension, will also increase, reaching the equivalent of about 250,000 Chilean pesos (roughly 255 US dollars). This increase will be introduced gradually, starting with the oldest age groups.

From 2027, current pension funds with fixed risk profiles will shift to "generational funds", automatically adjusting risk levels according to the age of participants.

To reduce fees and improve competition, a small share of pension members will be randomly moved every two years to the provider with the lowest costs, unless those individuals actively choose to remain with their current provider.

Persistent problems

Despite the relative stability of key economic indicators, and a successful pension reform, it did little to make up for the general disillusionment of ordinary Chileans. On top of the failure to rewrite the constitution, rising crime rates and violence linked to gang activities have become major public concerns. Illegal immigration, particularly from Venezuela and Haiti, has also emerged as a politically divisive issue. President Boric and his government have been repeatedly criticised for appearing ‘soft on crime and naïve on borders’.

The economic strain felt by the public was further aggravated by successive increases in electricity prices. As pandemic-era electricity subsidies expired (originally introduced to freeze tariffs and ease household burdens during COVID-19), the government implemented tariffs to address the resulting debt of approximately USD 6 billion accumulated by utility companies. Remarkably, these temporary price hikes passed without significant protests, suggesting that the political left was able to contain potential dissent among its traditional base. Even so, they still hit ordinary Chileans hard, further eroding confidence in the current administration.

GDP growth hovered around 2–2.5% annually, falling short of expectations. Opposition parties blame the Boric government for not achieving stronger economic performance and propose measures such as reducing corporate taxes and cutting regulatory red tape to reach 3% annual growth.

Demographic ageing is quickly becoming yet another structural challenge for future productivity and fiscal sustainability of the country. On top of this, it could also put additional stress on the newly-enacted pension framework.

An ageing population adds another layer of complexity, challenging future productivity and potentially straining the newly reformed pension system. Additionally, the labour market remains weak, particularly because key investment sectors like mining and energy create limited employment compared to construction or commerce, fuelling support for right-wing alternatives.

Authoritarian nostalgia

Amid growing dissatisfaction, the upcoming 2025 presidential election has seen a rise in right-wing candidates who appeal to nostalgia for Pinochet’s authoritarian era, despite its history of human rights abuses:

José Antonio Kast, who ran unsuccessfully against Boric in 2021, is a vocal admirer of aspects of the Pinochet regime, particularly economic liberalisation and security policies. Kast promotes stringent anti-immigration measures and traditional conservative social values.

Johannes Kaiser, another radical right-wing figure, openly praises parts of Pinochet’s rule, frequently engaging in provocative rhetoric that appeals to voters frustrated by crime and immigration. Kaiser’s confrontational style resonates with a segment of Chilean society longing for authoritarian-style order.

Evelyn Matthei, currently mayor of Providencia, is seen as a pragmatic conservative candidate. Matthei advocates a firm stance on crime and immigration while being economically liberal. Her moderate conservatism attracts centrist voters looking for stability without extreme authoritarian rhetoric.

On the left, the coalition has rallied behind Jeanette Jara, a Communist Party figure with a robust track record in managing successful pension reforms. Jara's pragmatism, demonstrated by her effectiveness as Minister of Labour, has earned respect even beyond her political base. Nevertheless, her candidacy could split votes on the left, complicating her path to the presidency and possibly opening the way for two right-wing candidates to enter a runoff.

Although extremist candidates have gained visibility, Chileans were expected to prefer centrist politics. The introduction of mandatory voting in 2025 should have benefitted moderate candidates

However, recent polls show José Antonio Kast is narrowly leading the presidential race with 25% in spontaneous voting intention, just ahead of Jeannette Jara at 24%, while the more moderate Evelyn Matthei trails at 12%. Kast’s growing support underscores a continued appetite for tough stances on crime and immigration among segments of the electorate, while Jara’s consistent performance reflects strong backing for her leftist but pragmatic approach. Matthei, once seen as a potential bridge between moderates and conservatives, appears to be losing ground. Despite her administrative competence and moderate tone, she is currently being outpaced by both Kast’s hardline appeal and Jara’s disciplined campaign.

Chile’s struggle since the 2019 social upheaval highlights its many internal contradictions: successful economic stabilisation and pension reforms coexist alongside deep social disenchantment and political fragmentation. Although the Boric administration secured notable economic achievements, significant unresolved issues, such as the constitutional reform failures, security concerns, demographic pressures, and political divisions, continue to shape public sentiment and electoral preferences. The direction chosen by voters in 2025 will clarify whether moderation or political extremes will dominate Chile’s next chapter.

Summary Q&A

1. Why did Chile face mass protests in 2019?
The October 2019 protests were triggered by a metro fare hike in Santiago but quickly spread nationwide. They revealed deep-rooted issues like high education costs, weak pensions from the privatised system, and unequal access to healthcare.

2. What happened with Chile’s constitutional reform attempts?
Two referenda failed: a progressive draft in 2022 was rejected by 62% of voters, and a more conservative draft in 2023 also fell short. The repeated failures weakened President Gabriel Boric’s credibility and hurt the centre-left coalition.

3. How has Chile’s economy performed under Boric?
Inflation fell from 14% in 2022 to about 3% in 2023, and public debt remains below 45% of GDP. Growth has stayed modest at 2–2.5%, supported by services exports, lithium investments, and renewable energy, but job creation is limited.

4. What is Chile’s new pension reform?
Approved in January 2025, the reform increased the Universal Guaranteed Pension to roughly 250,000 pesos, addressed gender gaps, and introduced “generational funds” adjusting risk by age. It also reduced fees through random reallocation to low-cost providers.

5. What challenges remain for Chile?
Rising crime, gang violence, and illegal immigration from Venezuela and Haiti dominate public concerns. Electricity price hikes, weak labour markets, and an ageing population also strain households and the new pension system.

6. Who are the main candidates in Chile’s 2025 election?
On the right, José Antonio Kast leads with a hardline stance on crime and immigration, while Evelyn Matthei appeals to moderates and Johannes Kaiser draws far-right support. On the left, Jeanette Jara, known for her pension reform leadership, is emerging as the main contender.

7. What do polls say ahead of the 2025 election?
As of mid-2025, Kast polls around 25%, Jara 24%, and Matthei 12%. The close race reflects Chile’s divide between authoritarian nostalgia, leftist pragmatism, and centrist moderation.