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Leftist Gabriel Boric was elected president of Chile on Sunday, vowing higher taxes, greener industries and greater equality, after tapping into discontent over an investor-friendly economy that has left many behind.

With almost all votes counted, the former student protest leader won 56% of the vote, above conservative rival Jose Antonio Kast’s 44%, electoral body Servel reported. Kast conceded in a speech to followers saying Boric had won fair and square. The victory, by a larger margin than forecast, is likely to spook markets that fear interventionist policies. Boric, 35, will take office in March as one of the youngest presidents in the world and an ambitious agenda.

His win in the country’s second round paves the way not only for a generational shift but also for the biggest economic changes in decades for one of Latin America’s richest countries, a global financial market favorite. He came out on top after a highly polarized campaign that only moderated in the final stretch as both contenders wooed centrists. He will face enormous challenges including a divided congress, plunging economic growth, the writing of a new constitution and the lingering threat of social unrest.

“I will do my best to live up to the challenge,” Boric said in his first comments as president-elect, a conversation with President Sebastian Pinera broadcast by local TV channels. “The agreements need to be among all Chileans and not behind closed doors.”

The two agreed to meet in Santiago on Monday to begin the transition.

Chile's Gabriel Boric shows his ballot at a polling station during the presidential election, in Punta Arenas, Chile, on Sunday. | REUTERS
Chile’s Gabriel Boric shows his ballot at a polling station during the presidential election, in Punta Arenas, Chile, on Sunday. | REUTERS

Boric describes himself as a moderate socialist who shuns the hard left models of Cuba and Venezuela. Kast and his supporters didn’t believe that and, pointing to Boric’s alliance with the communist party, lamented that their country, famed for years of intense economic growth after neo-liberal policy shifts, would face disaster if he won.

“This is the worst scenario that the markets could have envisioned,” said Klaus Kaempfe, portfolio solutions director at Credicorp Capital in Santiago. “They were waiting for a much tighter vote showing a desire for dialogue.”

Pinochet throwback

Boric’s supporters saw Kast as a dangerous throwback to the right-wing dictatorship of Gen. Augusto Pinochet because of Kast’s emphasis on public order, conservative social mores and fighting immigration.

Boric, who is unmarried, bearded and tattooed, first gained prominence a decade ago when he led nationwide demonstrations calling for free and high-quality education. He ran successfully for lower house deputy in 2013 and was re-elected to a second term in a landslide vote.

His emphasis on social justice dovetailed with a period of unrest that exploded over a transit fare hike in 2019 and quickly ballooned into a broader movement demanding better health care, public transport and pensions. During the presidential campaign, Boric often vowed that, “if Chile was the birthplace of neoliberalism, it will also be its grave.”

Supporters of Chilean President-elect Gabriel Boric celebrate following the official results of the runoff presidential election in Santiago on Sunday. | AFP-JIJI
Supporters of Chilean President-elect Gabriel Boric celebrate following the official results of the runoff presidential election in Santiago on Sunday. | AFP-JIJI

When he voted in his native Patagonian hometown of Punta Arenas on Sunday, he said he represented “a new generation that is entering politics with clean hands, a warm heart and a cool head.”

Boric wants to dismantle some pillars of Chile’s economy such as its private pension funds, which form the bedrock of the local capital markets. He backs higher taxes on both the rich and the nation’s crucial mining industry — Chile is the world’s biggest copper producer — while also promising to keep government debt in-check.

Kast criticized Boric for being soft on crime, changing views on key issues and backing a fourth round of early pension fund withdrawals that spooked investors. Questions have also been raised about Boric’s inexperience and youth.

His victory will likely prompt the peso to sink in the short-term to 880-890 per U.S dollar. from current levels closer to 850, while the benchmark stock exchange will fall to 4,000 points from around 4,300, Jorge Selaive, chief economist at Scotiabank Chile, wrote on Twitter on Dec. 16.

Chile's Gabriel Boric takes a photo with supporters after casting his ballot at a polling station in Punta Arenas, Chile, on Sunday. | REUTERS
Chile’s Gabriel Boric takes a photo with supporters after casting his ballot at a polling station in Punta Arenas, Chile, on Sunday. | REUTERS

In March, Boric will take the helm of a nation that’s facing unprecedented political upheaval. Social unrest kicked off the process of drafting a new constitution, now being done by a left-leaning assembly, which will be put to a national referendum in 2022.

He will have to contend with economic growth that will come to a halt, slowing from a record high near 12% this year to a rate closer to 2%, according to the central bank. Policy makers are also raising the interest rates to tame soaring inflation and, while Chile still has relatively sound fiscal accounts, the debt-to-GDP ratio has increased quickly amid pandemic spending.

Regionally, Chile’s election follows the triumph of Pedro Castillo in Peru earlier this year, and stands to add momentum to leftist candidates in Colombia and Brazil, which will hold presidential elections next year. Similarly to Chile, both of those countries are facing increasingly polarized politics.

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