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Economic Overview

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) 279.34252.82331.25352.66374.23
GDP (Constant Prices, Annual % Change) 1.0-5.8e11.02.51.9
GDP per Capita (USD) 14,620e12,99316,79917,70218,607
General Government Balance (in % of GDP) -1.7-2.5-10.7-4.0-2.9
General Government Gross Debt (in % of GDP) 28.232.534.437.339.7
Inflation Rate (%) 2.33.0e4.24.43.1
Unemployment Rate (% of the Labour Force) 7.210.89.17.46.8
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 , October 2021

Note: (e) Estimated Data

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

Chile is among the most industrialised countries in Latin American and some of its key industries include mining (copper, coal and nitrate), manufactured products (food processing, chemicals, wood) and agriculture (fishing, viticulture and fruit). The industrial sector in Chile contributes 31.4% of GDP and employs 22.2% of the working population. The mining sector is one of the pillars of the Chilean economy, mainly due to large amounts of copper reserves, which make Chile the world's largest copper producer, responsible for over 1/3 of the global copper output. The production of goods significantly grew in 2021, mainly due to the performance of the manufacturing industry.

According to the latest data from the World Bank, the agricultural sector contributed 3.8% of GDP in 2020 and employed 8.9% of the active population in 2019. Agriculture and livestock farming are the main activities in central and southern parts of the country. Fruit and vegetable exports have reached historic records due to a deliberate strategy implemented in the 1990s targeting the European, North American and Asian markets. Chile is one of the biggest wine producers in the world and its location in the Southern Hemisphere allows the country to offer out-of-season fruits to countries of the Northern Hemisphere. In 2021, however, draughts in the north of the country - a region with key agricultural areas - negatively impacted the agricultural sector.

The services sector contributes 56.4% of GDP and employs around 68.7% of the population. The Chilean economy faces three main challenges: overcoming its traditional dependence on the price of copper, as copper production represents 50% of the country's exports; developing a self-sufficient food supply, as agriculture currently produces less than half of domestic needs; and increasing its productivity, especially in the mining sector. The sector has been consistently growing in recent decades, reinforced by the rapid development of communication and information technology, access to education and an increase in specialist skills and knowledge among the workforce. Among the highest growing sectors in recent years are tourism, retail and telecommunications. Although the restrictions put in place to contain the pandemic have had a strong impact on services, the sector registered an overall growth in 2021, as vaccination rates rose and people's mobility increased. The sector's recovery was mainly driven by education, health, commerce, restaurants, hotels, and transport.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 9.0 22.3 68.8
Value Added (in % of GDP) 3.9 31.4 56.5
Value Added (Annual % Change) -2.6 -3.7 -6.9

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Chilean Peso (CLP) - Average Annual Exchange Rate For 1 USD 676.96648.83641.28702.90792.73

Source: World Bank - Latest available data.

 

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Foreign Trade

Chile has a very open economy, highly dependent on international trade, which represented 57.8% of the country's GDP in 2020 (World Bank). The country mainly exports copper (which accounts for 51.8% of exports), fish fillets and other fish meat (3.5%), chemical wood pulp (2.8%); apricots, cherries, and peaches (2.6%), and wine (2.5%). Imports involve petroleum oils (8.9%), motor cars and other vehicles (5.4%), electrical apparatus for line telephony (4%), petroleum gas (2.4%), and automatic data processing machines(2.2%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services decreased by 0.1% in 2021 and is expected to increase by 5.1% in 2022 and 3.4% in 2023, while the volume of imports of goods and services increased by 30.8% in 2021 and is expected to reach 2.5% in 2022 and 2.4% in 2023.

Chile's top three exporting partners are China, the United States and Japan while its main importers are China, the United States and Brazil. Chile has signed Free Trade Agreements (FTAs) with several important economies, notably the European Union, the United States, China and South Korea and is a member of the Pacific Alliance since 2012 with Mexico, Colombia and Peru. Its comparative economic advantages (revenue from mining, competitive and counter-seasonal agriculture sector) have given it access to the large markets of North America, Europe and the Asia-Pacific (and recently to other South American countries, especially Brazil). Chile also signed a trade continuity agreement with the UK, ensuring continued trade relations. Challenges to Chilean trade include replacing the failed Union of South American Nations with ProSur to strengthen economic integration and trade relationships in the region (Buenos Aires Times). Additionally, with the world’s largest known copper reserves, Chile is a commodity-based, export-driven economy, which heightened Chile's exposure to the impact of the COVID-19 pandemic, since its economic performance is interlaced with patterns of global demand.

Chile's trade balance remains structurally positive, and attained USD 18,369 million in 2020, a significant increase from the previous year, mainly due to higher metal prices, which boosted export revenues and stood out the rebound in imports. Imports of goods and services decreased 12.7% in 2020, while exports decreased by 1% (World Bank). According to WTO data, in 2020, Chile exported 73,4 million USD worth of goods, while its imports stood at 59,2 million USD. As with regards to imports and exports of services in the same year, those amounted to 11,3 million USD and 6,3 million USD respectively.

 
Foreign Trade Values 20162017201820192020
Imports of Goods (million USD) 58,82565,25874,68569,88859,226
Exports of Goods (million USD) 59,91768,85974,70868,76373,485
Imports of Services (million USD) 13,07513,15714,60914,36211,316
Exports of Services (million USD) 9,62510,0989,9409,2596,318

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20162017201820192020
Foreign Trade (in % of GDP) 55.755.757.356.957.8
Trade Balance (million USD) 4,8647,3514,2112,95318,369
Trade Balance (Including Service) (million USD) 1,5503,527-458-2,15013,371
Imports of Goods and Services (Annual % Change) 0.94.68.1-2.4-12.7
Exports of Goods and Services (Annual % Change) 0.5-1.55.3-2.6-1.0
Imports of Goods and Services (in % of GDP) 27.527.228.828.926.3
Exports of Goods and Services (in % of GDP) 28.128.428.528.031.5

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20212022 (e)2023 (e)2024 (e)2025 (e)
Volume of exports of goods and services (Annual % change) -0.25.13.52.82.7
Volume of imports of goods and services (Annual % change) 30.92.62.52.02.4

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Chile is a member of the following international economic organisations: Latin American Integration Association (ALADI), IMF, Asia-Pacific Economic Cooperation (APEC), G-15, G-77, ICC, Latin American and the Caribbean Economic System, OECD, Mercosur (associate), among others. For the full list of economic and other international organisations in which participates Chile click here. International organisation membership of Chile is also outlined here.
Free Trade Agreements
The complete and up-to-date list of Free Trade Agreements signed by Chile can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)
2020
China 38.9%
United States 13.2%
Japan 8.7%
South Korea 5.6%
Brazil 4.2%
See More Countries 29.4%
Main Suppliers
(% of Imports)
2020
China 27.8%
United States 17.8%
Brazil 7.3%
Argentina 5.6%
Germany 3.9%
See More Countries 37.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Sebastian PIÑERA (since March 11th, 2018). President-elect: Gabriel BORIC (assuming office: March 11th, 2022). The president is both chief of state and head of government. There is no de facto vice president. In case the president is unable to perform his duties, his powers are temporarily transferred to the Minister of the Interior, who is then designated as acting president.
Next Election Dates
General elections (National Congress and President): November 2025
Current Political Context
Since taking office in 2018, Sebastian Piñera has taken numerous initiatives and reforms, which are still to be implemented. In May 2021, Chileans went to the ballot boxes to choose the 155 members of the convention intended to draw up the new constitution to replace the country's current military dictatorship-era constitution. The outcome of the referendum, however, was considered a defeat by the ruling Piñera government, which expected to garner at least one third of the votes in order to avoid disruptive changes to the current constitution, but reached only 24% of seats. Independent candidates were the major winners, obtaining 42% of seats. Moreover, in November 2021, the country held presidential elections and the left-wing candidate, Gabriel Boric, became the youngest president ever elected in Chile, at 35 years old, as well as the one elected with the highest number of votes in Chilean history. In 2022, the draft of the new constitution will be put to a national vote, where the population will determine whether to accept it or not. The new constitution is expected to revision the economic and social model that had been imposed on the country by Augusto Pinochet in 1980, as well as address the current political structure, the provision of social goods and environmental protection.
Main Political Parties
Chilean political forces are divided between left, centre-left and centre-right coalitions. After the 2021 general elections, centre-right coalition "Chile Podemos Más" kept their position as the largest bloc in both chambers, followed by the new left-wing coalition "Apruebo Dignidad" (the second largest bloc in the Chamber of Deputies), and centre-left New Social Pact (which is the second largest bloc in the Senate).

Chile Podemos Más (Chile, we can (do) more; former Chile Vamos!) is the current governing centre-right coalition, composed of the following parties:
- Independent Democratic Union (UDI): right-wing, conservative, liberal, Catholic
- Political Evolution (Evópoli): centre-right, liberal, conservative
- National Renewal (RN): centre-right, conservative
- Democratic Independent Regionalist Party (PRI): centre to centre-right, regionalist

Apruebo Dignidad (Approve Dignity) is a left coalition including:
- Humanist Action (Partido Humanista): left-wing, libertarian socialist, environmentalist
- Democratic Revolution (Revolución Democrática): centre-left to left-wing, democratic socialist
- Social Green Regionalist Federation (Federación Regionalista Verde Social): centre left to left-wing, green politics, sustainability
- Communist Party of Chile (Partido Comunista de Chile): left-wing, communist, Marxist–Leninist
- Christian Left of Chile (Izquierda Cristiana de Chile): left-wing, Christian left, Christian socialist             
- Social Convergence (Convergencia Social): left-wing, libertarian socialist, anti-neoliberalist
- Commons (Comunes): left-wing, autonomist, feminist

New Social Pact (Nuevo Pacto Social) is a centre to centre-left coalition which includes:
- Socialist Party (Partido Socialista de Chile): centre-left, social democratic, progressist
- Party for Democracy (Partido por la Democracia): centre-left, traditions of democratic socialism and liberal progressiveness
- Christian Democratic Party (Partido Demócrata Cristiano): centre, self-declared to bridge communism and capitalism
- Citizens (Ciudadanos): centre to centre-left, social liberalist, progressist, reformist
- Radical Party of Chile (Partido Radical): centre/centre-left; member of Socialist International movement

Executive Power
The President is both the Chief of State and Head of Government, and holds the executive power. The President appoints the Cabinet and has the authority to remove the Commanders-in-Chief of the Armed Forces. He or She is elected by popular vote for a single four-year term and is not eligible for a consecutive re-election.
Legislative Power
The legislature is bicameral. The Parliament (or National Congress) consists of a Senate (the upper house) with its 43 members elected by popular vote to serve eight-year terms (with half of the membership elected alternatively every four years), and the Chamber of Deputies (the lower house) with its 155 members elected by popular vote to serve for four years. Elections follow the Hondt method (proportional representation). The citizens of Chile enjoy considerable political rights.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Chile, please visit the Chilean government platform with the official data. Official information on the progress of the epidemic in Chile is consolidated by the Ministry of Health, which provides a daily epidemiological updates including key national figures.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in Chile and the current sanitary measures in vigour, please consult the Chilean government platform on COVID-19 and the website of the Ministry of Health including the up-to-date information on the containment measures put in place and public health recommendations.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the national Customs authority website.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Chile on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the information on the economic recovery scheme put in place by the Chilean government to address the impact of the COVID-19 pandemic on the Chilean economy, please visit the website of the Ministry of the Economy. Additional information in English is available on KPMG's website.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Chilean government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Chile in the IMF’s Policy Tracker platform.
Support plan for businesses
For the information on the local business support scheme established by the Chilean government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
Support plan for exporters
To find out about the support plan for exporters put in place by the Chilean government, please consult the support plan for Chilean exporting companies available on the official portal ProChile.
 

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