Chile rises to 20th in economic freedom ranking, leads Latin America
Oct. 14 (UPI) -- Chile ranked as Latin America's freest economy in the 2026 Economic Freedom of the World report published by Canada's Fraser Institute, climbing six places from the previous edition to 20th among 165 countries and territories.
Chile overtook Costa Rica for the first time to become the region's highest-ranked economy.
The report assesses how institutions and policies allow individuals to make their own economic decisions, including working, conducting transactions, starting businesses and using their property. It measures five areas: size of government, legal system and property rights, sound money, freedom to trade internationally and regulation.
Although published in 2026, the report uses data from 2024. Hong Kong topped the global ranking, followed by Switzerland, Singapore, New Zealand and the United States.
"Where people are free to pursue their own opportunities and make their own economic choices, they lead more prosperous, happier and healthier lives," said Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of the report.
The study links greater economic freedom to higher incomes and longer life expectancy, although it cautions that these associations do not, by themselves, establish causation.
Chile tied with Malta for 20th place, just behind Germany in 19th and Canada in 18th. It also ranked ahead of Spain in 24th, Sweden in 33rd, France in 39th and Italy in 47th.
Chile's improvement was driven primarily by monetary stability, where its score rose from 8.58 to 9.18 points, lifting the country from 59th to 44th place in that category.
Economist Michele Labbé, a faculty member in economics, business and government at San Sebastián University, said average annual inflation fell from 7.3% in 2023 to 3.9% in 2024, improving conditions for economic activity.
"There was greater control over inflation, and that is always good news for a country because it allows investments to be planned," she told UPI.
According to Labbé, price stability makes it easier for businesses to make investment decisions.
"When inflation is not under control, it is difficult to set prices, and when it is difficult to set prices, it is difficult to conduct economic activity. That is how the result should be interpreted," she said.
Labbé noted that Chile's economic conditions improved compared with 2023 but remained below their 2018 levels.
Economist Felipe Cerda, director of the MBA program and academic director of business engineering at Universidad Mayor, agreed that the improvement reflected the effects of the Central Bank's restrictive monetary policy following fiscal expansion and external shocks during the COVID-19 pandemic.
Chile also improved its ranking in the size of government, legal system and property rights categories.
Cerda linked those gains to reduced uncertainty following the conclusion of Chile's constitutional reform processes, which resulted in voters rejecting proposed new constitutions in 2022 and 2023.
"As the existing constitution becomes firmly established, risks such as legal uncertainty diminish, which is a fundamental factor, for example, in long-term investment decisions," he told UPI.
Labbé cautioned that Chile's rise in the ranking reflected both improvements in its own performance and changes in other economies.
While Guatemala recorded smaller gains than Chile, Costa Rica and Panama posted weaker results than in the previous year.
Costa Rica lost its position as Latin America's leading economy, falling from 14th to 28th place.
According to Cerda, the Central American country recorded declines in four of the five categories, particularly in international trade and the legal system and property rights.
He cited administrative obstacles, protectionist pressures and difficulties in productive sectors as possible contributing factors.
"Costa Rica experienced a significant deterioration in its legal system and property rights, along with a 10% increase in tariffs that did not previously exist, making it less competitive," Labbé said.
Cerda also pointed to difficulties in productive sectors and administrative requirements, including environmental impact assessments that can act as recurring non-tariff barriers and undermine economic activity.
Other Latin American countries ranked considerably lower. Panama placed 34th, followed by the Dominican Republic in 40th, Peru in 45th, El Salvador in 58th and Uruguay in 59th. Argentina ranked 151st, while Venezuela finished last worldwide.
The report concluded that global economic freedom began recovering in 2024 but had not returned to pre-pandemic levels. Latin America and the Caribbean remained the region furthest behind in that recovery.
"Latin American economies still face serious problems with property rights and public policies," Labbé said. "Although there is great diversity across Latin America, and Venezuela obviously has a major impact at the bottom of the ranking, the region has lagged for many years because of its public policies, particularly tariffs, restrictions on international trade, very rigid regulations and a lack of inflation control."
Cerda attributed differences among Latin American economies to legal uncertainty and obstacles to investment.
"Countries in the region live in a state of constant tension, transmitting legal uncertainty to the rest of the world," he said. "This is compounded by rigid regulations and excessive bureaucracy associated with impact assessments that are not properly aligned with economic activity, permitting procedures and administrative burdens that make investment more difficult."
Brazil approves shorter workweek ahead of presidential runoff
BRASILIA, Brazil, Oct. 15 (UPI) -- Brazil's Senate approved a constitutional amendment to reduce the workweek to five days just 11 days before the presidential runoff election between President Luiz Inácio Lula da Silva and opposition candidate Flávio Bolsonaro.
The reform, initially driven by a social media movement, became the centerpiece of Lula's economic platform in his re-election campaign against Bolsonaro.
After the Chamber of Deputies approved the measure in May, the Senate was expected to vote on it in November. However, lawmakers from Lula's governing coalition pushed through a special legislative schedule, moving the vote forward to secure passage Wednesday night in advance of the runoff.
Bolsonaro initially called the proposal "populist" and warned that it could lead to widespread unemployment. But opposition lawmakers reversed course shortly before the vote as the measure gained broad public support.
National polls showed more than 70% support for the reform, putting pressure on opposition lawmakers ahead of the election.
Right-wing senators ultimately voted almost unanimously in favor of the measure. Bolsonaro justified the decision as a response to demands from working-class voters.
The Senate approved the amendment 75-1.
Brazil's Congress is scheduled to formally enact the amendment Tuesday, replacing the traditional six-day workweek with a five-day schedule and two days off.
The measure will gradually establish a 40-hour weekly limit without reducing workers' pay.
Workers will be entitled to two paid days off each week. According to Brazilian news outlet G1, the days off will not necessarily fall on Saturdays and Sundays. Employers may adjust schedules according to their industry's needs, although at least one day off should preferably fall on Sunday.
The approved amendment also introduces a legal category known as the "superemployee," designed to provide greater scheduling flexibility for highly paid professionals, Folha do S. Paulo reported.
Employees with university degrees earning more than 21,180 Brazilian reais, approximately $3,800 per month, will retain their right to two days off each week, but will no longer be required to record their starting and ending work times.
Analysts say the provision gives employees in senior positions at large companies greater control over their schedules, addressing business concerns about the rigidity of the new rules.
In announcing his change of position, Bolsonaro also sought to address concerns among business leaders who opposed the reform.
According to CNN Brasil, the opposition candidate said that if he wins the Oct. 25 runoff, he will use his congressional majority to amend the legislation in 2027 and compensate businesses through tax exemptions or government subsidies.
