Chile: Economic and Political 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. After a modest 0.2% expansion in 2023, real GDP growth in 2024 accelerated to 2.2%. Growth was uneven, with the mining and utilities sectors (16% of GDP) performing strongly in the first three quarters due to resolved mining supply issues and growth in renewable energy. Other sectors, especially construction, grew more slowly, reflecting cyclical adjustments and limited potential in non-mining industries. On the expenditure side, growth was mainly driven by net exports, while consumption and investment remained weak. Real GDP is expected to grow around 2-2.5% in 2025 and the medium term, driven by a recovery in domestic demand and continued growth in mining exports (data IMF).
Concerning public finances, the fiscal deficit for 2024 was estimated at 2.7% of GDP, 0.8% higher than budgeted. Revenue fell short, mainly due to weaker corporate income tax collection, possibly from post-pandemic shifts, and lower VAT from slow domestic demand recovery. Lithium revenues also missed projections due to a sharp price drop. In response, the government cut spending, especially in Q4 2024. The government aims to reduce the fiscal deficit to 1.1% of GDP in 2025 and 0.5% in 2026, although the target seems hard to reach. The debt-to-GDP ratio increased marginally to 41% in 2024, up by 0.6% y-o-y, and is expected to follow an upward trend over the forecast horizon (IMF). Headline inflation increased from 3.4% in December 2023 to 4.5% in December 2024. Non-core inflation drove this rise, primarily due to a 43% increase in regulated household electricity prices (2.2% of the CPI basket) between June and October, following a freeze from 2019 to 2023. The Central Bank continued easing monetary policy, reducing its policy rate from 8.25% at the end of 2023 to 5.0% in December 2024, with a slower pace since June. Long-term rates remain high, reflecting the persistent elevated rates in the U.S. Inflation is projected to return to the 3% target by early 2026, as the impact of electricity tariff hikes fades and service inflation declines.
The labour market remains weaker than pre-pandemic levels. In 2024, employment growth slowed, and labour participation and unemployment rates have yet to return to 2019 levels. Factors contributing to this include cyclical weakness in labour-intensive sectors like construction, a significant rise in real minimum wages, lower labour force participation from seniors and youths, and new labour regulations, such as the gradual reduction of work hours from 45 to 40 hours per week. Overall, real wages rose by 4.1% year-on-year in November 2024. For the year as a whole, the IMF estimated the unemployment rate at 8.5%, with a marginal reduction expected this year (8%). Although poverty rates have seen a decline, with the poverty rate dropping from 8% in 2020 to 5% in 2024, income inequality remains a concern. The Gini coefficient, a measure of income inequality, stood at 0.43 in 2024 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 34,789 in 2024 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 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 335.64 | 328.72 | 362.24 | 379.15 | 396.05 |
| GDP (Constant Prices, Annual % Change) | 0.2 | 2.5 | 2.4 | 2.5 | 2.4 |
| GDP per Capita (USD) | 16,815 | 16,365 | 17,927 | 18,657 | 19,382 |
| General Government Balance (in % of GDP) | -3.4 | -2.8 | -1.9 | -0.6 | -0.3 |
| General Government Gross Debt (in % of GDP) | 39.4 | 41.0 | 41.6 | 41.4 | 41.5 |
| Inflation Rate (%) | 7.6 | 3.9 | 4.2 | 3.1 | 3.0 |
| Unemployment Rate (% of the Labour Force) | 8.7 | 8.5 | 8.0 | 7.8 | 7.7 |
| Current Account (billions USD) | -11.90 | -7.46 | -9.92 | -10.78 | -11.60 |
| Current Account (in % of GDP) | -3.5 | -2.3 | -2.7 | -2.8 | -2.9 |
Source: IMF – World Economic Outlook Database, October 2021
According to the latest data from the World Bank, the agricultural sector contributes 3.5% of Chilean GDP and employs 6% of the active population. Agriculture and livestock farming are the main activities in the 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. Moreover, 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. Chile’s export portfolio now features high-value speciality crops such as table grapes, blueberries, and kiwifruit, cultivated under precise irrigation systems and innovative agronomic practices in the Central Valley. In 2024, fruit exports drove Chile’s agricultural sector to record highs, surpassing USD 7 billion, up 20% from 2023. Cherries led with over USD 3.5 billion, followed by table grapes at over USD 1 billion (data National Statistics Institute – INE).
Chile is among the most industrialised countries in Latin America and some of its key industries include mining (copper, coal and nitrate), manufactured products (food processing, chemicals, wood) and agriculture (fishing, viticulture and fruit). Overall, the industrial sector in Chile contributes 29.7% of GDP and employs 22% 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. Chile's industrial production index rose 1.1% in 2024, driven by gains in mining and manufacturing (data INE). Mining output increased by 2.2%, boosted by higher copper extraction and processing. Manufacturing grew 0.6%, mainly from increased paper and paper product production. In contrast, the electricity, gas, and water index fell 0.7% from November 2023 due to declines in two of its three components.
The services sector contributes 56.9% of GDP and employs around 72% of the population. 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. In 2024, Chile welcomed over 5.2 million foreign tourists, up 40.4% from 2023 and 15.96% above pre-pandemic levels in 2019, according to the Tourism Undersecretariat. Official governmental figures show that, in Q1 2024, Chile’s service exports hit a record USD 674 million, up 42.7% from the previous year. Key sectors included online gaming, animation, remote education, and specialized services for mining, agriculture, industry, architecture, and banking. IT consulting led the sector, making up 44% of total service exports.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 6.2 | 22.1 | 71.7 |
| Value Added (in % of GDP) | 3.5 | 29.7 | 56.9 |
| Value Added (Annual % Change) | -0.3 | 1.6 | 0.9 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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