Chile's finance minister Ignacio Briones has now reduced the official forecast for economic growth in the country this year by more than a quarter to 1.4% from the previously expected 2% and has put next year's expansion at just 1% to 1.5% instead of its previous 2.3% estimate.
The mass protests have left more than 25 dead and upwards of USD1.5 billion in losses for businesses. The peso has plummeted to a historic low, prompting multiple central bank interventions and pushing the Chilean government to roll out a USD5.5 billion economic recovery plan earlier this month.
Now, new research from travel analytics firm, Forward Keys, has revealed the riots have taken a tremendous toll on travel and tourism to the country. Its analysis shows that 2019 flight bookings to Chile prior to the protests (up to 13-Oct-2019) were up +5.2% up on the equivalent period in 2018. In fact, in the early stages of the protests in the week of 14-Oct-2019 to 20-Oct-2019 they were actually up +9.4% year-on-year.
However, the protests escalated dramatically on 18-Oct-2019 when organised groups seriously damaged over 80 metro stations, with the result that the metro was closed down and a curfew declared in the Greater Santiago area. This is when the activities started to significantly impact air bookings.
For the week 21-Oct-2019 to 27-Oct-2019, Forward Keys, says flight booking collapsed, falling -46.1% year-on-year, with that trend continuing through Nov-2019 with bookings approximately -55% down for each of the following four weeks.
The announcement of the economic recovery plan by the President, has eased the decline, but continued rioting by protesters, means bookings still remain significantly down year-on-year. For the week of 25-Nov-2019 to 01-Dec-2019, they were down -36.8% down and then down -29.4% for the week 02-Dec-2019 to 08-Dec-2019.
Over the first three quarters of 2019 Chile had seen arrivals grow +5.2%, but Olivier Ponti, vice president insights at ForwardKeys highlights that Chile had actually been performing much stronger than even that, but was already feeling the heat from a steep decline in visitors from one of its most important source markets, Argentina, owing to the collapse of the Argentine peso.
Since the beginning of 2018, the value of the Argentine peso has more than halved in value against the Chilean peso, with the result that visitor arrivals have fallen by almost a third (-31.1%) from Jan-2018 to Nov-2019, according to Forward Keys.
Looking on a month by month basis, benchmarked against the previous year, the travel analytics specialist says, arrivals in Chile from Argentina fell to below 50% for the first time in Sep-2018 and that trend continued until Mar-2019, at which point, the pace of decline started to slow, although the decline continued.
"Before the riots, I would have predicted that the ongoing decline in bookings from Argentina would have stabilised by the end of this year; however, the recent political situation and a substantial drop in arrivals in Nov-2019 has left me feeling decidedly pessimistic," says Mr Ponti.
Most of the political parties represented in Chile's National Congress have now signed an agreement to call a national referendum in Apr-2020 regarding the creation of a new constitution. But many believe the situation may still get worse, before it gets any better.
CHART - Passenger numbers at Chile's airports have risen significantly across the second half of the 2010s, but these end of decade protests could impact 2019 performance
Source: CAPA - Centre for Aviation and Aeronautical Board of Chile