Chile flag Chile: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Chile is traditionally considered as a model in Latin America in terms of political and financial transparency. It has also been one of the fastest growing economies in Latin America over the last decade, enabling the country to significantly reduce poverty. However, the World Bank estimates that the impacts of the COVID-19 crisis could reverse years of growth in Chile’s middle-class, reducing its size by nearly two million individuals and pushing new middle-class households back into poverty. Still, in 2021, the country had an estimated growth in GDP of 11%, mainly driven by inventory replenishment, increased household consumption, and economic measures to support income. In the coming years, the Chilean economy should continue to grow, albeit at a slower pace, as well as continue to benefit from strong copper international prices and ongoing fiscal stimuli. According to IMF forecasts, GDP growth is expected to reach 2.5% in 2022 and stabilise at 1.9% in 2023.

General government balance closed at -10.7% of GDP in 2021 following a large fiscal response to the COVID-19 pandemic. However, Chile's current budget proposal targets a significant deficit reduction over the next couple of years, with general government balance projected to decrease to -4% in 2022 and -2.9% in 2023. The government's gross debt was estimated at 34.4% of GDP in 2021 and is likely to rise to 37.3% in 2022 and 39.7% in 2023. However, the government aims to stabilise debt over the medium term. According to IMF estimates, inflation reached 4.2% in 2021 and is expected to remain stable to 4.4% in 2022 and decrease to 3.1% in 2023. Inflation should improve through fiscal austerity measures announced by the Treasury Department, particularly due to 1.6% of GDP in spending cuts over the next four years. In 2021, the fiscal stimulus package that was put in place to mitigate the impacts of the pandemic, as well as pension withdrawals and the country's high vaccination rates, fuelled domestic demand and pushed Chile to a gradient recovery from the COVID-19 crisis. Despite recent efforts to diversify its economy, Chile remains vulnerable to international copper prices, international demand (particularly from China), climate and earthquake risks, inadequate R&D, vulnerable road network and energy grid, high energy prices and a poor educational system (Coface). The long-term outlook for copper prices, therefore, has far-reaching ripple effects for employment, wages, government revenue, and national income in Chile, so the major issue to be tackled by the government in order to revive economic growth is to reinforce commercial cooperation with new trade partners, particularly in Asia.

Chile's relatively high unemployment rate slightly decreased to 9.1% in 2021, influenced mainly by the construction, commerce, and transport sectors, which started to bounce back as vaccination rates rose and people's mobility increased. Moreover, the IMF expects the unemployment rate to continue decreasing in 2022 and 2023, reaching 7.4% and 6.8%, respectively. The country has the highest GDP per capita in the region (USD 14,772; Coface), but also high levels of inequality and informality (OECD). Factors in wealth disparity include the current tax system that handicaps mostly lower and middle-income classes. Chile has notably invested heavily in renewable energy, which is expected to account for up to 20% of its energy generation by 2025.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 279.34252.82e331.25352.66374.23
GDP (Constant Prices, Annual % Change) 1.0-5.8e11.02.51.9
GDP per Capita (USD) 14,620e12,993e16,79917,70218,607
General Government Balance (in % of GDP) -1.7-2.5e-10.7-4.0-2.9
General Government Gross Debt (in % of GDP) 28.232.5e34.437.339.7
Inflation Rate (%) 2.33.0e4.57.54.5
Unemployment Rate (% of the Labour Force) 7.210.8e9.17.46.8
Current Account (billions USD) -10.383.46-8.32-7.61-7.81
Current Account (in % of GDP) -3.71.4-2.5-2.2-2.1

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Chilean Peso (CLP) - Average Annual Exchange Rate For 1 ZAR 46.0248.7848.3848.8148.12

Source: World Bank, 2015

 

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Latest Update: June 2022