Chile

Chile is a land of breathtaking contrasts. Stretching from the driest desert in the world—the Atacama—to the icy fjords of Patagonia, it offers an unparalleled variety of landscapes. However, contrasts are not only driven by nature.

Chile stands out in Latin America as a high-income country with a robust macroeconomic framework, open trade regime, and a dynamic private sector. Over recent decades, Chile has achieved sustained economic growth, significant poverty reduction, and an expansion of the middle class. It was the first country in the region to join the OECD, and its poverty rate is among the lowest in Latin America. The country has also made progress in fiscal management, financial sector development, and the diversification of its export base, particularly in mining, agriculture, and services.

However, Chile faces persistent and emerging challenges. Economic growth and productivity have slowed in recent years, with the total factor productivity stagnating. Inequality remains high, with limited social mobility and disparities in access to quality health, education, and social protection services. The labor market is segmented, with low female participation and high informality. Regional disparities persist, and vulnerable groups—including women, youth, migrants, and indigenous peoples—face higher poverty and exclusion.

Another critical challenge is the exposure of the country to climate risks, including droughts and water scarcity, and its economy remains dependent on carbon-intensive sectors. The transition to a greener, more resilient economy is essential for long-term growth and social inclusion.

To advance towards a more inclusive, sustainable, and resilient development, Chile can boost its productivity and innovation, advance gender equality and labor market inclusion, improve access to social services, enhance financial inclusion and support a green and resilient growth.

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Chile has a track record of sound macroeconomic policies and robust institutions and has effectively managed recent global volatility. However, the country faces mounting challenges owing to low growth, subdued investment, and a decade-long productivity stagnation.  Weak investment and stagnant productivity dampen potential growth and strain labor market outcomes.

Mining is expected to support growth over the medium term. On the fiscal front, the government is making additional efforts to achieve its medium-term fiscal balance target, as structural shifts have led to a revenue shortfall. Poverty in Chile is the lowest in the region and has been steadily declining. However, significant regional disparities persist and progress in non-monetary indicators remains limited.

GDP grew by 2.6 percent in 2024, driven by rising mining exports. Investment fell by 1.4 per cent, while consumption grew by a mere 1.0 percent. Unemployment declined slightly to 8.5 percent but remained above the 7.2 percent rate recorded in 2019. Labor informality rates remained high, especially among women, reaching 28.4 percent compared to 24.8 percent among men. Inflation eased to 4.3 percent in 2024, down from 7.6 percent in 2023, but remained above the central bank’s target of 3 percent.

Real GDP growth is expected to be 2.6 percent in 2025, supported by strong exports and a rebound in consumption, alongside rising foreign and domestic investment, especially in energy and mining.  The fiscal deficit should drop from 2.8 percent of GDP in 2024 to 1.5 percent in 2025. Inflation is projected to reach the Central Bank’s 3 percent target by the first half of 2026 and remain near that level. Poverty (US$8.30/day in 2021 PPP) is expected to decline from 5.5 percent in 2024 to 5.3 percent in 2025 and 5.1 percent in 2026.

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The World Bank Group (WBG) has supported Chile’s development for more than 75 years, through a range of instruments including loans, insurance, grants, technical assistance, and knowledge sharing with countries from various regions around the world.

Since receiving the first World Bank development loan made to a country outside of Europe in 1948, the relationship with the country has continued to evolve through a joint learning process to address its greatest development challenges.

The World Bank´s active portfolio totals US$ 750 million, comprising four lending operations aimed at supporting a green hydrogen financing facility, improving universal primary health care, moving toward more sustainable and equitable water resources management, and improving the quality of intersectoral social protection.  There is also a Reducing Emissions from Deforestation and Forest Degradation (REDD+) program for US$26 million and a US$5 million grant for implementation of carbon markets. Five Reimbursable Advisory Services agreements with a total value of US$8.29 million have been signed, and cover topics such as universal primary health care, social protection, transport, and early childhood education.

IFC has actively supported Chile’s private sector in enhancing productivity, promoting inclusion, and advancing sustainability. In the last fiscal year, IFC’s new commitments in Chile reached a record US$2.9 billion, an almost 300 percent increase compared to the same period the previous year. In terms of industry, the financial sector accounts for 70.6 percent of the total, infrastructure and natural resources for 26.3 percent, and manufacturing, agribusiness, and services for 5.8 percent.

The Multilateral Investment Guarantee Agency (MIGA) issued a guarantee for a bank loan to CODELCO to cover payment obligations under its renewable energy power purchase agreements, thus contributing to the decarbonization of the country’s largest energy consumer.

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