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Political risks back in the spotlight

The region faces a busy political calendar. Chileans head to the polls on Sunday to vote on a new constitution which would usher in sweeping changes to the country’s current economic model. While the latest polls suggest that the charter will be rejected, the bigger picture is that Chile is shifting towards a bigger role of the state in the economy. Meanwhile, in Brazil, presidential campaigning is in full swing and neither Bolsonaro nor Lula have demonstrated appetite for fiscal austerity, which will probably weigh on Brazilian financial markets. In more positive news, the situation in Argentina’s financial markets has stabilised somewhat following Sergio Massa’s appointment as economy minister. But the economic situation remains dire and meeting the IMF’s targets will be a tall order.

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