Chile

Abstract

Chile’s very strong fundamentals, policy frameworks, and macroeconomic track record have been instrumental in helping the economy absorb the impact of recent shocks, including the social unrest in late 2019. Over the past three decades, Chile has been enjoying a very solid macroeconomic performance. The robust growth has resulted in one of the largest reductions in poverty and highest incomes per capita in the region. Owing to the fiscal rule and the long record of prudent fiscal policy, public debt is low by international standards and the country enjoys steady sovereign access to capital markets at favorable terms. The credible inflation-targeting framework has delivered low and stable inflation with well-anchored inflation expectations. The sound financial system is supported by an effective regulatory and supervisory framework. International reserves are at a comfortable level. The authorities remain fully committed to maintaining very strong policies and policy frameworks. Despite showing one of the highest levels of resilience among emerging market economies, Chile’s open economy remains exposed to substantial external risks, such as those stemming from a prolonged Covid-19 outbreak.