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Chile Economic Snapshot

Economic Forecast Summary (November 2022)

Economic Outlook Note - Chile

Growth is expected to slow to 1.9% in 2022. A 0.5% contraction of output is projected for 2023, followed by growth of 2.6% in 2024. Tighter financial conditions, the withdrawal of pandemic-related support measures and the eroding effect of inflation on purchasing power will dampen household consumption. Higher interest rates and low business confidence will keep investment subdued.

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Economic Survey of Chile - September 2022

Chile’s economy recovered swiftly from the pandemic on the back of exceptionally strong policy support, which eventually led to a significant overheating of the economy. Inflation has risen amid buoyant private consumption, further aggravated by the Russian aggression on Ukraine. Monetary authorities have acted in a timely and decisive fashion to contain inflation, and the fiscal stimulus is being withdrawn. Significant underlying challenges will have to be addressed over the next years, including stagnant productivity and high inequalities. Strengthening competition, reducing regulatory barriers and spending more on research and innovation will be key priorities for boosting productivity and investment, while pressing social needs call for more attention to how incomes and opportunities are distributed. Around a third of the workforce is in informal work, which limits their access to social protection benefits. Ensuring a well-defined set of benefits for all, with no distinction between formal and informal workers, will be key. Expanding access to high-quality early childhood education would improve educational outcomes and allow more women to work. Environmental challenges and risks loom large, but also provide significant opportunities for the future. The current high fossil content of the energy matrix contrasts with Chile’s strong potential in renewable energy generation.

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Reform Priorities (April 2021)

Going for Growth 2021 - Chile

The COVID-19 pandemic exposed long-standing economic vulnerabilities: high inequality and a high share of small and mid-size companies with weak productivity performance. Solid COVID-19 related government interventions are cushioning some of the negative effects, but structural policy action is needed to prevent the crisis effects undoing some of the progress in reducing poverty and inequality achieved through the past decades and to strengthen economic resilience and growth in the future.

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2021 Structural Reform Priorities

  • Education and skills: Improve quality and equity of the education system
  • Labour market: Enhance lifelong learning and active labour market policies, while boosting female labour participation
  • Social protection: Make the tax and transfer system more friendly to redistribution
  • R&D and digitalisation: Boost the digital transformation
  • Competition and regulation: Enhance competition and ease regulatory procedures

 

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