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Economic and political overview

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, even though the country's GDP grew in 2022, growth was slower than the previous year, reaching an estimated 2%, as tighter financial conditions, the withdrawal of pandemic-related support measures, and rising inflation dampened household consumption. In the coming years, the Chilean economy should fluctuate between growth and retraction,with the IMF forecasting a GDP contraction of 1% in 2023 and a growth 2% in 2024.

General government balance closed at -2.6% of GDP in 2022, 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 -2% in 2023 and -1.4% in 2024. The government's gross debt was estimated at 36.2% of GDP in 2022 and is likely to rise to 36.9% in 2023 and 37.8% in 2024. However, the government aims to stabilise debt over the medium term. According to IMF estimates, inflation reached 11.6% in 2022 and is expected to decrease to 8.7% in 2023 and 4.1% in 2024. 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.  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 7.9% in 2022, influenced mainly by the construction, commerce, and transport sectors, which bounced back after the pandemic. However, the IMF expects the unemployment rate to slightly increase to 8.3% in 2023 and remain stable at 8.2% in 2024. 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 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 254.28316.67300.73358.56375.70
GDP (Constant Prices, Annual % Change) -6.111.72.4-1.01.9
GDP per Capita (USD) 13,06816,06015,09517,82718,510
General Government Balance (in % of GDP) -1.6-12.1-1.1-1.6-0.9
General Government Gross Debt (in % of GDP) 32.436.338.036.638.5
Inflation Rate (%) 3.04.511.67.94.0
Unemployment Rate (% of the Labour Force) 10.88.97.98.37.9
Current Account (billions USD) -4.95-23.19-27.10-14.93-14.17
Current Account (in % of GDP) -1.9-7.3-9.0-4.2-3.8

Source: IMF – World Economic Outlook Database , October 2021

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 31.7% of GDP and employs 22.3% 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. In 2022, industrial production decreased, mainly led by a drop in copper output due to substandard ore grades, labour woes, and water scarcity.

According to the latest data from the World Bank, the agricultural sector contributes 3.3% of GDP and employs 9% of the active population. 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 2022, however, unprecedented draughts in the country, specially in key agricultural areas, negatively impacted the agricultural sector.

The services sector contributes 54.6% of GDP and employs around 68.8% 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 during the pandemic have had a strong impact on services, the sector registered an overall growth in 2022, with the recovery being 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) 3.3 31.7 54.6
Value Added (Annual % Change) 2.3 5.1 14.1

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 64.4% of the country's GDP in 2021 (World Bank). The country mainly exports copper (which accounts for 56.4% of exports), fish fillets and other fish meat (3.3%), iron ores (2.6%), chemical wood pulp (2.5%), and apricots, cherries, and peaches (2.3%). Imports involve petroleum oils (10.3%), motor cars and other vehicles (8.3%), telephone sets (3.7%), petroleum gas (2.9%), and automatic data processing machines (2.4%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services decreased by 0.4% in 2022 and is expected to increase by 1.3% in 2023 and 3.5% in 2024, while the volume of imports of goods and services decreased by 2.9% in 2022, a rate that's expected to drop to -7.5% in 2023 before increasing to -1.4% in 2024.

Chile's top trade partners are China, the United States, Brazil, Japan, Argentina, South Korea, and Germany. 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 10,528 million in 2021, a decrease from the previous year, mainly due to a drop in copper output, the country's main export. Imports of goods and services increased 31.3% in 2021, while exports decreased by 1.5% (World Bank). According to WTO data, in 2021, Chile exported USD 94,6 million worth of goods, while its imports stood at USD 91,1 million. As with regards to imports and exports of services in the same year, those amounted to USD 15,7 million and USD 6,6 million respectively.

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 65,25874,68569,88859,22692,197
Exports of Goods (million USD) 68,85974,70868,76373,48594,677
Imports of Services (million USD) 13,15714,60914,36211,31615,765
Exports of Services (million USD) 10,0989,9409,2596,3186,618

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

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 56.058.257.558.564.4
Trade Balance (million USD) 7,4904,4093,01618,97610,528
Trade Balance (Including Service) (million USD) 1,880-2,933-5,06911,616-1,451
Imports of Goods and Services (Annual % Change) 4.58.6-1.7-12.731.3
Exports of Goods and Services (Annual % Change) -1.04.9-2.5-1.1-1.5
Imports of Goods and Services (in % of GDP) 27.729.629.727.032.5
Exports of Goods and Services (in % of GDP) 28.328.527.831.531.9

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) 1.43.55.13.92.6
Volume of imports of goods and services (Annual % change) 0.92.02.81.11.8

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)		 2022
China 39.4%
United States 13.9%
Japan 7.6%
South Korea 6.2%
Brazil 4.6%
See More Countries 28.2%
Main Suppliers
(% of Imports)		 2022
China 25.3%
United States 20.9%
Brazil 9.7%
Argentina 5.8%
Germany 2.7%
See More Countries 35.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: President : Gabriel BORIC (since 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
In November 2021, Chile 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. That same year, 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 current constitution has been long criticised for contributing to inequality in the country, as it emphasises private property rights, including those over natural resources, as fails to offer social welfare guarantees. A new draft of the constitution was written in 2022, but 62% of Chileans voted against it. The draft revisioned the economic and social model that was imposed on the country by Augusto Pinochet in 1980, address the current political structure (such as replacing the Senate with a Chamber of Regions), the provision of social goods and environmental protection, and also focused on making Chilean society more equal, for example, by requiring that women hold at least 50% of positions in official institutions. After the referendum results, Gabriel Boric said he would work with Congress and civil society to come up with a new proposal that would meet the demands of the people.
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).

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

Some other political parties in the country include:
- 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

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 50 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

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Chili, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
 

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