Chile's growth has proven resilient over recent years and its timely monetary policy tightening has helped bring down inflation. Policy should now secure fiscal sustainability and foster productivity, according to a new OECD report.
The latest OECD Economic Survey of Chile says Chile's long-term growth outlook will largely depend on its ability to address structural barriers to lift productivity and investment, while maintaining robust public finances. Unlocking Chile's growth potential will require boosting digitalisation and innovation, closing gender gaps in the labour market, and harnessing the benefits of its potential for renewable energy generation and vast reserves of lithium and copper.
GDP is forecast to rise by 2.3% in 2025 and 2.1% in 2026, while inflation will gradually decline to an average of 3.2% in 2026. Growth will be driven by a gradual recovery of investment, solid private consumption supported by increasing real wages, and easing financial conditions.
"Chile stands at a pivotal moment, with significant challenges but also plenty of opportunities," OECD Secretary-General Mathias Cormann said, presenting the Survey in Santiago alongside Chile's Minister of Finance Mario Marcel. "Chile needs to focus on boosting its growth potential. This requires significant investments and structural reforms. By leveraging its abundant natural resources and strong institutions, Chile can achieve stronger, more sustainable, and better shared economic growth."
Chile's public debt remains lower than the OECD average but has been increasing while long-term spending pressures are set to increase. Putting debt on a declining path and addressing spending needs will require greater spending efficiency and mobilising tax revenues, including by expanding personal income taxation, reducing regressive tax exemptions, and continuing to address tax evasion.
Accelerating productivity will require boosting digitalisation and innovation. Chile has one of the highest connectivity rates in Latin America following policy efforts to close digital gaps. However, business use of digital tools is still limited, especially among small, medium, and micro enterprises. Increasing public R&D spending and simplifying R&D grant programmes would encourage more R&D spending by the private sector.
Chile faces shortages of high-skilled workers for the digital and green transitions. Efforts are needed at all levels of education and training, including lifelong learning and reskilling, to keep up with the digital transition. Likewise, social and economic inequalities between men and women have decreased in Chile, but further efforts are needed to facilitate women's participation in the labour market. Expanding access to high-quality childcare and elderly care would help Chile unlock its full labour force potential.
Chile faces significant climate hazards and has set ambitious targets to decarbonise its economy. To lessen the impact of climate risks, it is necessary to strengthen government capabilities and co-ordination, and invest in resilient infrastructure. Efforts to increase renewable energy require simplifying regulation, boosting investment, upgrading electricity transmission and port infrastructure, as well as increasing carbon prices to meet climate targets and harness the benefits of the green transition.
See an Overview of the Economic Survey of Chile with key findings and charts
