Income convergence has reversed
Potential growth is set to decline as the population ages rapidly
Ambitious structural reforms are estimated to lift incomes significantly
Covid-19 triggered a strong vaccination campaign and exceptional fiscal support
Pandemic-related policy measures have far overcompensated household income losses
Consumption and growth are slowing down amid low confidence
The labour market is recovering gradually
The current account deficit has widened amid deteriorating terms of trade
External debt is substantial and foreign exchange reserves provide some buffer
Financial stability indicators
Chile’s traditionally deep credit markets have become shallower and riskier
Monetary policy has reacted early, but inflation expectations remain high
Rising public expenditures led to a substantial widening of the fiscal deficit
Emergency transfers rose strongly during 2021
The debt outlook has deteriorated, but is still better than in other EMEs
Public debt has risen
Tax revenues are low (graph)
Tax revenue composition
Only few people pay personal income taxes
Productivity has been a drag on growth and has fallen behind regional peers
Vibrant entry of new firms has been sustaining productivity growth
Competition is relatively weak
Product market regulations compare well on average, but challenges remain
Municipal licenses are a significant burden on entrepreneurship
Regulation restricts competition in the notaries profession
Chile’s trade participation is mid-range, but it attracts sizeable FDI flows
Mining continues to play a significant role for Chile’s exports
Regulations affecting international trade and investment could be improved
R&D and innovation spending and support remain low
Learning outcomes remain relatively low and dependent on socio-economic status
Corruption indicators
Energy and transport are the major source of GHG emissions
Fossil fuels still represent an important share of the energy matrix
Green tax revenues come from the most polluting industries