SMM12, April 4: the Chilean government unveiled a $5.5 billion economic recovery plan on Monday.

Chilean Finance Minister Ignacio Briones cut his official forecast for economic growth to 1.4% this year from 2% a month ago, while growth forecast for next year will fall to 1.5% from 2.3%. "Chile has paid a heavy price for the riots that have brought the Chilean economy to a standstill," he said at a news conference. "

The riots in Chile began on October 18, when subway fares rose, but then quickly turned into large-scale protests, with violent incidents such as fire prevention and robbery, killing 26 people and causing up to $1.5 billion in damage to businesses. The peso also fell to an all-time low.

As part of the recovery plan, the government will invest $2.4 billion in infrastructure to help small businesses. Government spending will grow by 9.8% next year, and the fiscal deficit will widen to 4.4% of GDP. The Chilean government expects to sell about $3.5 billion in foreign currency bonds next year to meet financing needs.

Chile's central bank said earlier Monday that the Chilean economy shrank by 3.4% in October from a year earlier, marking the worst contraction in a decade. Chile's monthly index of economic activity, (IMACEC), fell 3.5 per cent in October from a year earlier, the sharpest decline since July 2009.

Among them, the non-mining monthly economic activity index fell 4% from a year earlier, mainly reflected in education, transportation, business services, as well as hotels and restaurants.

The mining monthly index of economic activity rose 2 per cent year-on-year, mainly due to an increase in production of Codelco's Chuquicamata mines. In the face of the turmoil, most of Chile's copper mines are operating normally.

Last week, violence soared again, prompting President Sebastian Pinera to renew his call for deeper reforms and a crackdown on illegal practices.

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