Chile flag Chile: Economic outline

Economic Outline

Economic Indicators

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.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 300.73344.40354.47372.49390.40
GDP (Constant Prices, Annual % Change) 2.4-0.51.62.32.4
GDP per Capita (USD) 15,16617,25417,64718,43419,210
General Government Balance (in % of GDP) -1.9-3.4-2.3-1.8-1.2
General Government Gross Debt (in % of GDP) 38.038.441.242.442.6
Inflation Rate (%) n/a7.83.63.03.0
Unemployment Rate (% of the Labour Force) 7.98.89.08.68.0
Current Account (billions USD) -27.10-12.00-12.91-13.03-12.73
Current Account (in % of GDP) -9.0-3.5-3.6-3.5-3.3

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Chilean Peso (CLP) - Average Annual Exchange Rate For 1 GBP 914.02835.05855.57878.631,016.32

Source: World Bank, 2015

 

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Latest Update: February 2024

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