Economic Overview

Chile, recognized as a high-income economy by the World Bank, has traditionally relied on export-oriented sectors such as mining, agriculture, and forestry, complemented by a stable financial framework. In 2023, the GDP growth rate experienced a modest decline of 0.5% compared to the preceding year, attributed to weakened domestic demand and constrained credit conditions, as reported by the IMF. However, Chile's economy is poised for a resurgence in 2024 and 2025, with growth rates projected at 1.6% and 2.3%, respectively. This anticipated recovery is underpinned by expectations of rising real wages, reduced interest rates, and sustained global demand for mineral exports. However, inherent risks such as a potential slowdown in China and climate-related adversities could impede growth dynamics, warranting vigilance and proactive economic management strategies.

On the fiscal side, after a robust consolidation in 2022 post the phase-out of COVID-related stimuli, the budgetary deficit reemerged in 2023 due to the economic slowdown and lower average mineral commodity prices, prompting reduced tax collection and higher financing costs. Expenditure surged due to increased pension payments and capital expenditures. The approval of a new mining royalty bill in May 2023, expected to collect annually roughly 0.45% of GDP when fully phased in, reflects efforts to shore up revenues amidst economic challenges. General Government Balance, a critical indicator of fiscal health, deteriorated in 2023, with the deficit widening to 3.4% of GDP, exceeding the IMF's projection of -2.3% for the year. Although the deficit is expected to marginally improve in 2024 and 2025, reaching -2.3% and -1.8% respectively, fiscal pressures persist. General Government Gross Debt also witnessed an upward trend, rising to 38.4% of GDP in 2023 and is projected to further increase to 41.2% and 42.4% in 2024 and 2025, highlighting challenges in debt management despite efforts to contain expenditures. Inflation has been a notable concern, with the rate reaching 7.8% in 2023, significantly above the target range. However, measures to address inflationary pressures are projected to bring it down to 3.6% in 2024 and stabilize at 3% in 2025. Monetary policy measures, though minimal, are expected to support these efforts, with cautious adjustments to policy rates anticipated to mitigate inflationary risks while sustaining economic growth.

Unemployment trends persist as a challenge, with the unemployment rate rising to 8.8% in 2023, reflecting labour market strains amidst economic uncertainties. Despite efforts to stimulate job creation, the unemployment rate is expected to persist above pre-pandemic levels, hovering around 9.0% in 2024 and gradually declining to 8.0% by 2026. Labour market conditions are further compounded by persistent levels of inequality. Although poverty rates have seen a decline, with the poverty rate dropping from 8% in 2020 to 4.8% in 2022, income inequality remains a concern. The Gini coefficient, a measure of income inequality, stood at 0.43 in 2022 according to World Bank data. These indicators underscore the need for sustained policy efforts to address income disparities and promote inclusive economic growth. Additionally, with GDP per capita (PPP) at USD 29,935 in 2023 according to IMF data (the highest in Latin America), ensuring equitable distribution of economic benefits remains paramount for achieving sustainable development and social cohesion.

Foreign Trade

Chile has a very open economy, highly dependent on international trade, which represents around 75% of its GDP (latest data available). In 2022, the country mainly exported copper (which accounted for 45% of exports), carbonates (mostly lithium, 8%), fish fillets and other fish meat (4%), chemical wood pulp (2.7%), and apricots, cherries, and peaches (2.5%). Imports involved petroleum oils (16.6%), motor cars and other vehicles (5%), motor vehicles for the transport of goods (3.5%), and petroleum gas (3.3% - data Comtrade). In the same year, the number of exporting companies increased to 7,781, representing a 7% increase compared to 2021. The manufacturing sector saw the highest number of new exporters in 2022 (+456), followed by services (+33), mining (+23), fishing and aquaculture (+9), and wines (+7).

Chile's 2022 top exporting partners were China (39.4%), the United States (13.9%), Japan (7.6%), South Korea (6.2%), and Brazil (4.6%); whereas imports came chiefly from China (25.3%), the United States (20.9%), Brazil (9.7%), Argentina (5.8%), and Germany (2.7% - data Comtrade). In 2022, the country's exports were directed to a total of 194 destinations, with increases in the value of shipments recorded in 126 of these. The largest increases in terms of exported value were seen in China (USD 4.437 billion), South Korea (USD 1.333 billion), Japan (USD 748 million), Mexico (USD 447 million), Belgium (USD 304 million), Peru (USD 299 million), Costa Rica (USD 286 million), Colombia (USD 271 million), and India (USD 190 million – data National Bank). 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.

Chile's trade balance has been fluctuating in recent years. According to WTO data, in 2022, Chile exported USD 98.5 million worth of goods, while its imports stood at USD 104.5 million. Exports and imports of services in the same year amounted to USD 8.5 million and USD 22.9 million, respectively. In the same year, the World Bank estimated the country’s trade balance to be negative by 3.7% of GDP (from -0.8% one year earlier). According to the latest figures from the National Bank, Chile's trade exchange recorded during January to August of 2023 reached a total amount of USD 117.517 billion (FOB), a figure that showed a negative variation of 8.5% compared to the same period in 2022. Total exports amounted to USD 66.8 billion (of which 58.7% was from the mining sector), against USD 68.2 billion in imports.

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.