Economy of Chile
Overview
Chile has a market-oriented economy characterized by a high level of foreign trade. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis.
A severe drought exacerbated the recession in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Between 2000 and 2007 growth ranged between 2%-6%. Throughout these years Chile maintained a low rate of inflation with GDP growth coming from high copper prices, solid export earnings (particularly forestry, fishing, and mining), and growing domestic consumption.
President BACHELET in 2006 established an Economic and Social Stabilization Fund to hold excess copper revenues so that social spending can be maintained during periods of copper shortfalls. This fund probably surpassed $20 billion at the end of 2007. Chile continues to attract foreign direct investment, but most foreign investment goes into gas, water, electricity and mining. Unemployment has exhibited a downward trend over the past two years, dropping to 7.8% and 7.0% at the end of 2006 and 2007, respectively.
Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico.
GDP
Real Growth Rate
5%
Per Capita
USD 13,900
From Agriculture
5%
From Industry
51%
From Services
44%
Labour Force
Available for Work
7
Working in Agriculture
14%
Working in Industry
23%
Working in Services
63%
Unemployment Rate
7%
Population Below Poverty Line
18%
Inflation Rate
4%
Investment as Percent of GDP
21%
Budget
Revenues
USD 44,960 (m)
Expenditures
USD 30,510 (m)
Public Debt
US$ 0.00 (m)
Agricultural Products
Grapes, apples, pears, onions, wheat, corn, oats, peaches, garlic, asparagus, beans; beef, poultry, wool; fish; timber
Core Industries
Copper, other minerals, foodstuffs, fish processing, iron and steel, wood and wood products, transport equipment, cement, textiles
Exports
Value
USD 67,640 (m)
Commodities
Copper, fruit, fish products, paper and pulp, chemicals, wine
Partners
US 15.6%, Japan 10.5%, China 8.6%, Netherlands 6.7%, South Korea 5.9%, Italy 4.9%, Brazil 4.8%, France 4.2% (2006)
Imports
Value
USD 43,990 (m)
Commodities
Petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, natural gas
Partners
US 15.6%, Argentina 12.6%, Brazil 11.8%, China 9.7% (2006)
External Debt
USD 49,650 (m)
Fiscal Year
Calendar year
