Crime costs Chile $8 billion a year as violence chokes economic growth

Reuters

4 hours ago

SANTIAGO, June 27 (Reuters) - La Piojera in downtown Santiago has been a lively bar for over a century, drawing locals and tourists with typical Chilean foods, drinks and music, but now its doors are shutting earlier and sales are plummeting as rising crime has strangled the country and the economy.
Chile is losing an average of 2.6% of its gross domestic product, about $8.2 billion a year, due to rising crime according to a study released by CLAPES UC, a research center at Chile's Universidad Catolica.
The report attributed the economic impact due to businesses, like La Piojera, closing earlier or shutting down in high-crime areas, the loss of investment and increased spending in security.
"My sales are down 60%," Mauricio Gajardo, manager of La Piojera, told Reuters on a Saturday night, when only a few patrons were at the bar.
Gajardo said La Piojera used to be full at 8 p.m. on a Saturday night and would close past midnight. Now, on average, he closes at about 8:30 p.m.
"The city helped me with a few municipal guards, but people still insist the area is dangerous," Gajardo said.
Other businesses are trying another approach, offering discounts to customers to keep them throughout the night.
"After 10 p.m. we've noticed our business drops ssignificantly," said Cristian Gonzalez, manager of Bar & Vuelvo. "So we try to prepare and face this with discounts or offers after 11 or 12 at night."
Chile has seen an uptick in murders since 2016, rising to 6.0 in 2024 from a low of 2.32 per 100,000 in 2015. The elevated rate is still one of the lowest in Latin America, but researchers say this makes the economic impact more significant than a similar rise in more dangerous countries like Colombia or Mexico.
"Countries (with a high murder rate) have in some way normalized the situation and the impact of a rise in the murder rate is less when the rate is already very high," said Leonardo Hernandez, a professor and one of the authors of the study.
This has been the case for Jose Tomas Rodriguez, a local university student, who says he and his friends have already changed the way they go out.
"It's not just me, but my whole social circle, we're changing our routine and going out earlier, maybe go out in the afternoon," Rodriguez said. "I think it's something that everyone has been changing."