Core Viewpoint - Chile's newly elected president, Kast, will face significant economic challenges including weak growth, deteriorating public finances, and a sluggish labor market upon taking office in March 2026 [1] Economic Growth - Chile's economic growth is currently weak, with GDP growth expected to be around 2.5% in 2025, potentially slowing further in 2026, aligning with the central bank's long-term growth forecast of 2% [1] - Long-term economic recovery is viewed as crucial for addressing employment and fiscal issues [1] Labor Market - The labor market remains weak, with an unemployment rate of 8.4% from August to October, marking 34 consecutive months above 8% [1] - Approximately 850,000 individuals are unemployed, with the female unemployment rate nearing 9% [1] Public Finances - Structural deficits persist, with the debt-to-GDP ratio projected to exceed 42% in 2025, potentially breaching the prudent limit of 45% if not addressed [1] Positive Factors - Inflation has decreased from a peak of 14% in 2022 to 3.4% in November 2023, with expectations to converge to the central bank's 3% target in the first half of 2026 [1] - Copper prices remain strong, exceeding $5 per pound, with future bullish outlooks, potentially leading to record export values surpassing $100 billion in 2025 [1] - The stock market has performed well, with the IPSA index rising 50% this year, surpassing the 10,000-point mark [1] Recommendations for New Government - Analysts suggest that the new government must quickly address the three macroeconomic challenges: slowing growth, structural and cyclical issues in the labor market, and deteriorating public finances [1] - Promoting investment and potential growth is essential to establish a sustainable fiscal foundation [1]

Group 1: Economic Outlook - Goldman Sachs projects global GDP growth to be 2.8% in 2026, surpassing the market consensus of 2.5% [1] - The U.S. economy is expected to outperform other major developed economies, with a GDP growth forecast of 2.6% in 2026, driven by reduced tariff drag, tax cuts, and a more accommodative financial environment [1] - China's GDP growth is anticipated to be 4.8% in 2026, exceeding market expectations, supported by strong export performance despite weak domestic demand [1] - The Eurozone's economic outlook is less favorable, with a projected GDP growth of 1.3%, although fiscal stimulus in Germany and stable growth in Spain may mitigate some structural challenges [1] Group 2: Labor Market and Inflation - Despite stable overall output growth, improvements in the labor market may lag behind economic expansion, particularly in the U.S., where rising productivity increases the economic growth threshold needed for job creation [1] - Goldman Sachs expects inflation to decline more rapidly in 2026, with core inflation rates in the U.S. and the U.K. dropping from around 3% to near 2% by the end of 2026, aided by factors such as easing tariff impacts and slowing wage growth [2] - The Federal Reserve is projected to cut interest rates by 50 basis points next year, bringing the federal funds rate to a range of 3.0% to 3.25% [2] - The macroeconomic outlook is seen as supportive for stock markets and many emerging market assets, although high valuations, particularly in AI-related sectors, and a weak labor market may increase market volatility [2]

Core Viewpoint - The internal divisions within the Federal Reserve cast uncertainty on the path to interest rate cuts, marking an unprecedented level of disagreement during Chairman Powell's nearly eight-year tenure [1] Group 1: Federal Reserve Disagreements - Officials are divided on whether persistent inflation or a sluggish labor market poses a greater threat [1] - The restoration of official economic data may not resolve these divisions [1] Group 2: Market Implications - Despite investor expectations for a high likelihood of interest rate cuts at the next meeting, the internal splits complicate what seemed like a feasible plan just two months ago [1]