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Economy of Chile

Chile has is a developing market economy. It is classified as a high-income economy by the World Bank, and is recognized as one of the most prosperous countries in South America. Chile leads the region in areas such as competitiveness, income per capita, globalization, economic freedom, and low levels of perceived corruption. Despite its prosperity, Chile experiences significant economic inequality, as reflected by its Gini index, though this is close to the regional average. Among Organisation for Economic Co-operation and Development (OECD) countries, Chile has a robust social security system, with social welfare expenditures amounting to approximately 19.6% of GDP.

History
After Spanish arrival in the 15th century Chilean economy came to revolve around autarchy estates called fundos and around the army that was engaged in the Arauco War. During early colonial times there were gold exports to Peru from placer deposits which soon depleted. Trade restrictions and monopolies established by the Spanish crown are credited for having held back economic development for much of the colonial times. As effect of these restrictions the country incorporated very few new crops and animal breeds after initial conquest. Other sectors that were held back by restrictions were the wine and mining industries. The Bourbon reforms in the 18th century eased many monopolies and trade restrictions. In the 1830s Chile consolidated under the ideas of Diego Portales as a stable state open to foreign trade. Foreign investment in Chile grew over the 19th century. After the War of the Pacific the Chilean treasury grew by 900%. The League of Nations labeled Chile the country hardest hit by the Great Depression because 80% of government revenue came from exports of copper and nitrates, which were in low demand. After the Great Depression Chilean economic policies changed toward import substitution industrialization and the Production Development Corporation was established. Under the influence of the Chicago Boys the Pinochet regime made of Chile a leading country in establishing neoliberal policies. These policies allowed large corporations to consolidate their power over the Chilean economy, leading to long-term economic growth. The crisis of 1982 caused the appointment of Hernán Büchi as minister of finance and a sharp revision of economic policy. Despite a general selling of state property and contrary to neoliberal prescriptions, the regime retained the lucrative state owned mining company Codelco which stands for about 30% of government income. According to the CIA World Factbook, during the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio Aylwin, who took over from the military in 1990, deepened the economic reform initiated by the military government. The Aylwin government departed significantly from the neoliberal doctrine of the Chicago boys, as evidenced by higher government expenditure on social programs to tackle poverty and poor quality housing. Growth in real GDP averaged 8% from 1991 to 1997, but fell to half that level in 1998 because of tight monetary policies (implemented to keep the current account deficit in check) and lower exports due to the 1997 Asian financial crisis. Chile's economy has since recovered and has seen growth rates of 5–7% over the past several years. After a decade of impressive growth rates, Chile began to experience a moderate economic downturn in 1999, brought on by unfavorable global economic conditions related to the 1997 Asian financial crisis. The economy remained sluggish until 2003, when it began to show clear signs of recovery, achieving 4.0% real GDP growth. The Chilean economy finished 2004 with growth of 6.0%. Real GDP growth reached 5.7% in 2005 before falling back to 4.0% in 2006. GDP expanded by 5.1% in 2007. In recent years, more stable macroeconomic conditions have replaced Chile's post-pandemic turmoil. The annual median disposable income was $10,101 PPP in 2021. A 2.4 % real GDP growth in 2024 was attributed to rising household income and rebounding investment, according to the OECD (2025). Inflation dropped sharply from 12 % in 2023 to 4.3 % in 2024, approaching the Central Bank's target range. Mining continues to dominate the external industry, accounting for almost 60% of export earnings. Due to the global demand for battery materials, lithium output increased significantly in 2024 while copper production increased by 2.8%. Despite strong export success, productivity is still a structural challenge because worker output is roughly 50% below the OECD average. Public debt rose to 38 percent of GDP in 2024, reflecting long- term fiscal pressures and relatively low tax revenues. Policy discussions increasingly focus on diversification, female labor-force participation, and regulatory reforms to enhance productivity and sustain inclusive growth. ==Sectors==
Sectors
During 2012, the largest sectors by GDP were mining (mainly copper), business services, personal services, manufacturing and wholesale and retail trade. Mining also represented 59.5% of exports in the period, while the manufacturing sector accounted for 34% of exports, concentrated mainly in food products, chemicals and pulp, paper and others. Agriculture Chile is one of the 5 largest world producers of cherry and cranberry, and one of the 10 largest world producers of grape, apple, kiwi, peach, plum and hazelnut, focusing on exporting high-value fruits. In 2018, Chile was the 9th largest producer of grapes in the world, with 2 million tons produced; the 10th largest producer of apples in the world, with 1.7 million tons produced; and the 6th largest producer of kiwi in the world, with 230 thousand tons produced, in addition to producing 1.4 million tons of wheat, 1.1 million tons of maize, 1.1 million tons of potatoes, 951 thousand tons of tomatoes, 571 thousand tons of oats, 368 thousand tons of onions, 319 thousand tons of peaches, 280 thousand tons of pears, 192 thousand tons of rice, 170 thousand tons of barley, 155 thousand tons of cherries, 151 thousand tons of lemons, 118 thousand tons of tangerines, 113 thousand tons of oranges, 110 thousand tons of olives, 106 thousand tons of cranberries, in addition to smaller productions of other agricultural products. Agriculture and allied sectors like forestry, logging and fishing accounts only for 4.9% of the GDP as of 2007 and employed 13.6% of the country's labor force. Some major agriculture products of Chile includes grapes, apples, pears, onions, wheat, corn, oats, peaches, garlic, asparagus, beans, beef, poultry, wool, fish and timber. Chile's position in the Southern Hemisphere leads to an agricultural season cycle opposite to those of the principal consumer markets, primarily located in the Northern Hemisphere. Forestry The Chilean forestry industry grew to comprise 13% of the country's total exports in 2005, making it one of the largest export sectors for Chile. Wine Chile's unique geography and climate make it ideal for winegrowing and the country has made the top ten list of wine producers many times in the last few decades. The popularity of Chilean wine has been attributed not just to the quantity produced but also to increasing levels of quality. The combination of quantity and quality allows Chile to export excellent wines at reasonable prices to the international market. Mining The mining sector in Chile is one of the pillars of Chilean economy. The Chilean government strongly supports foreign investment in the sector and has modified its mining industry laws and regulations to create a favorable investing environment for foreigners. Thanks to a large amount of copper resources, complaisant legislation and an unregulated investment environment, Chile has become one of the main copper producers, with almost 30% of the global annual copper output. As of 2024 about of the value of Chilean copper exports is from unrefined copper concentrate, while cathode copper –much of it refined in Chile's copper smelters– stands for the remaining . In addition to copper, Chile was, in 2019, the world's largest producer of iodine and rhenium, the second largest producer of lithium and molybdenum, the sixth largest producer of silver, the seventh largest producer of salt, the eighth largest producer of potash, the thirteenth producer of sulfur and the thirteenth producer of iron ore in the world. The country also has considerable gold production: between 2006 and 2017, the country produced annual amounts ranging from 35.9 tonnes in 2017 to 51.3 tonnes in 2013. Services The service sector in Chile has grown fast and consistently 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. Chilean foreign policy has recognized the importance of the tertiary sector or service sector to the economy, boosting its international liberalization and leading to the signing of several free trade area agreements. Chilean service exportation consists mainly of maritime and aeronautical services, tourism, retail (department stores, supermarkets, and shopping centers), engineering and construction services, informatics, health and education. Chile ranked first among Latin American countries (and No. 32 worldwide) in Adecco's 2019 Global Talent Competitiveness Index (GTCI). Finance and banking Chile's financial sector has grown quickly in recent years, with a banking reform law approved in 1997 that broadened the scope of permissible foreign activity for Chilean banks. The Chilean Government implemented a further liberalization of capital markets in 2001, and there is further pending legislation proposing further liberalization. Over the last ten years, people who live in Chile have enjoyed the introduction of new financial tools such as home equity loans, currency futures and options, factoring, leasing, and debit cards. The introduction of these new products has also been accompanied by an increased use of traditional instruments such as loans and credit cards. Chile's private pension system, with assets worth roughly $70 billion at the end of 2006, has been an important source of investment capital for the capital market. However, by 2009, it was reported that $21 billion had been lost from the pension system to the 2008 financial crisis. Education Healthcare Telecommunications Retail Tourism , wine and pisco region Tourism in Chile has experienced sustained growth over the last decades. Chile received about 2.25 million foreign visitors in 2006, up to 2.50 million in 2007 The percentages of foreign tourists arrivals by land, air and sea were, respectively, 55.3%, 40.5% and 4.2% for that year. The two main gateways for international tourists visiting Chile are Arturo Merino Benítez International Airport and Paso Los Libertadores. Chile has a great diversity of natural landscapes, from the Mars-like landscapes of the hyperarid Atacama Desert to the glacier-fed fjords of the Chilean Patagonia, passing by the winelands backdropped by the Andes of the Central Valley and the old-growth forests of the Lakes District. Easter Island and Juan Fernández Archipelago, including Robinson Crusoe Island, are also major attractions. Many of the most visited attractions in Chile are protected areas. The extensive Chilean protected areas system includes 32 protected parks, 48 natural reserves and 15 natural monuments. Infrastructure Energy Transport Water supply and sanitation Science and technology ==Economic policies==
Economic policies
(1980–2017). According to the CIA World Factbook, Chile's "sound economic policies", maintained consistently since the 1980s, "have contributed to steady economic growth in Chile and have more than halved poverty rates." and continued privatization, though at a slower pace. The government's role in the economy is mostly limited to regulation, although the state continues to operate copper giant Codelco and a few other enterprises such as BancoEstado. Under the compulsory private pension system, most formal sector employees pay 10% of their salaries into privately managed funds. According to the CIA World FactBook, the GDP contracted an estimated −1.7% in 2009. The Chilean Government has formed a Council on Innovation and Competition, which is tasked with identifying new sectors and industries to promote. It is hoped that this, combined with some tax reforms to encourage domestic and foreign investment in research and development, will bring in additional FDI to new parts of the economy. There are three main ways for Chilean firms to raise funds abroad: bank loans, issuance of bonds, and the selling of stocks on U.S. markets through American Depository Receipts (ADRs). Nearly all of the funds raised through these means go to finance domestic Chilean investment. In 2006, the Government of Chile ran a surplus of $11.3 billion, equal to almost 8% of GDP. The Government of Chile continues to pay down its foreign debt, with public debt only 3.9% of GDP at the end of 2006. The target was of 1% of GDP between 2001 and 2007, it was reduced to 0.5% in 2008 and then to 0% in 2009 in the wake of the 2008 financial crisis. In 2005, key elements of this voluntary policy were incorporated into legislation through the Fiscal Responsibility Law (Law 20,128). By the end of 2012, they had respective market values of US$5.883 million and US$14.998 million. The main taxes in Chile in terms of revenue collection are the value added tax (45.8% of total revenues in 2012) and the income tax (41.8% of total revenues in 2012). The value added tax is levied on sales of goods and services (including imports) at a rate of 19%, with a few exemptions. The income tax revenue comprises different taxes. While there is a corporate income tax of 20% over profits from companies (called First Category Tax), the system is ultimately designed to tax individuals. Therefore, corporate income taxes paid constitute a credit towards two personal income taxes: the Global Complementary Tax (in the case of residents) or the Additional Tax (in the case of non-residents). The Global Complementary Tax is payable by those that have different sources of income, while those receiving income solely from dependent work are subject to the Second Category Tax. Both taxes are equally progressive in statutory terms, with a top marginal rate of 40%. Income arising from corporate activity under the Global Complementary Tax only becomes payable when effectively distributed to the individual. There are also special sales taxes on alcohol and luxury goods, as well as specific taxes on tobacco and fuel. Other taxes include the inheritance tax and custom duties. In 2012, general government expenditure reached 21.5% of GDP, while revenues were equivalent to 22% of GDP. Gross financial debt amounted to 12.2% of GDP, while in net terms it was −6.9% of GDP, both well below OECD averages. Inflation has followed a relatively stable trajectory since the year 2000, remaining under 10%, despite the temporary surge of some inflationary pressures in the year 2008. The Chilean peso's rapid appreciation against the U.S. dollar in recent years has helped dampen inflation. Most wage settlements and loans are indexed, reducing inflation's volatility. The CBoC is granted autonomous status by Chile's National Constitution, providing credibility and stability beyond the political cycle. According to the Basic Constitutional Act of the Central Bank of Chile (Law 18,840), its main objectives are to safeguard "the stability of the currency and the normal functioning of internal and external payments". To meet these objectives, the CBoC is enabled to use monetary and foreign exchange policy instruments, along with some discretion on financial regulation. In practice, the CBoC monetary policy is guided by an inflation targeting regime, while the foreign exchange policy is led by a floating exchange rate and, although unusual, the bank reserves the right to intervene in the foreign exchange markets. Chile unilaterally lowered its across-the-board import tariff for all countries with which it does not have a trade agreement to 6% in 2003. Higher effective tariffs are charged only on imports of wheat, wheat flour, and sugar as a result of a system of import price bands. The price bands were ruled inconsistent with Chile's World Trade Organization (WTO) obligations in 2002, and the government has introduced legislation to modify them. Under the terms of the U.S.–Chile FTA, the price bands will be completely phased out for U.S. imports of wheat, wheat flour, and sugar within 12 years. More recently, Chile has also been an active participant of deeper plurilateral trade agreement negotiations. Notably, Chile is currently in talks with eleven other economies in the Trans-Pacific Partnership (TPP), a proposed agreement that would stem from the existing P-4 Agreement between Brunei, Chile, New Zealand and Singapore. Chile has signed some form of bilateral or plurilateral agreement with each of the parties at TPP, although with different degrees of integration. Chile is also a party in conversations to establish the Pacific Alliance along with Peru, Mexico and Colombia. Trade exports and imports and the eighth largest producer. 2006 was a record year for Chilean trade. Total trade registered a 31% increase over 2005. During 2006, exports of goods and services totaled US$58 billion, an increase of 41%. This figure was somewhat distorted by the skyrocketing price of copper. In 2006, copper exports reached a historical high of US$33.3 billion. Imports totaled US$35 billion, an increase of 17% compared to the previous year. Chile thus recorded a positive trade balance of US$2.3 billion in 2006. ==Issues==
Issues
Unemployment hovered at 8–10% after the start of the economic slowdown in 1999, above the 7% average for the 1990s. Unemployment finally dipped to 7.8% in 2006, and continued to fall in 2007, averaging 6.8% monthly (up to August). Wages have risen faster than inflation as a result of higher productivity, boosting national living standards. The percentage of Chileans with household incomes below the poverty line – defined as twice the cost of satisfying a person's minimal nutritional needs – fell from 45.1% in 1987 to 11.7% in 2015, according to government polls. Critics in Chile, however, argue that poverty figures are considerably higher than those officially published; until 2016, the government defined the poverty line based on an outdated 1987 household consumption poll, instead of more recent polls from 1997 or 2007. According to critics who use data from the 1997 poll, the poverty rate goes up to 29%; a study published in 2017 claims that it reaches 26%. Using the relative yardstick favoured in many European countries, 27% of Chileans would be poor, according to Juan Carlos Feres of the ECLAC. Starting in 2016, a new Multidimensional Poverty Index is also used, which reached 20.9% using 2015 data. Chile's Gini Coefficient in 2003 (53.8) has slightly changed in comparison with the value in 1995 (56.4). In 2005 the 10% poorest among the Chileans received 1.2% of GNP (2000 = 1.4%), while the 10% richest received 47% of GNP (2000 = 46%). Regarding the census, assessments have exhibited mixed results. An initial evaluation by a domestic independent experts panel released in August 2013 placed the omission rate in 9.3%, three times as much as other census in the region, and recommended annulling the census to hold a new version in 2015. The government sought an assessment by international experts before making a final decision. == Social inequalities ==
Social inequalities
By 2021, the combined wealth of Chile's billionaires represented 16.1% of the country's gross domestic product (GDP). Historians generally explain the origin of the social gap by tracing it back to colonial times, when most land was divided between Spaniards and their descendants. This gave rise to the hacienda, in which society was divided between owners, employees, tenants and workers. Since this agrarian inequality, the concentration of wealth has spread to other economic sectors that exploit natural resources, such as mining. In more recent history, social inequality deepened in the 1970s and 1980s under Augusto Pinochet's regime, with the privatization of public enterprises in favor of large family fortunes, the repression of trade unions and the rejection of the welfare state. As social mobility is very low in Chile, social status is often passed down from generation to generation. ==Statistics==
Statistics
Main economic indicators The following table shows the main economic indicators in 1980–2031 (with IMF staff estimates in 2026–2031). Inflation below 5% is in green. GDP composition Main macroeconomic aggregates of GDP. Note: Data are preliminary. Source: Cuentas Nacionales de Chile – Evolución de la actividad económica en el año 2015 (p. 29), Central Bank of Chile, accessed on 23 March 2016. GDP by sector Gross domestic product by sector of the economy. Note: 2011 data are preliminary. Source: Cuentas Nacionales – Evolución de la actividad económica en el año 2011 (p. 34). Central Bank of Chile. accessed on 22 March 2012. Imports and exports Top exports Chile's top exports in 2013. Source: Central Bank of Chile's statistics database. == See also ==
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