Chile is the sixth largest economy in the region and one of South America’s most stable and prosperous countries, leading the regional rankings for competitiveness, income per capita, globalisation, economic freedom, and low corruption perception.
Chile is a liberal, open market economy with strong macroeconomic stability, characterised by a high level of foreign trade and a reputation for strong financial institutions. Its sound fiscal policies have enabled it to have the strongest sovereign bond rating in South America. It has enjoyed strong GDP growth since the mid 1990’s, maintains a tight rein on government spending and inflation and has the lowest tax burden in the region.
Chile’s growth in 2019 was limited to 1.1% following widespread social protests and resultant economic disruption towards the end of the year. This was followed by a contraction of 6% in 2020, mainly related to the effects of Covid 19. The economy rebounded with 12% growth in 2021, mostly driven by robust private consumption, high copper prices and a world beating Covid Vaccination programme. However, growth is set to slow dramatically again in 2022 and 2023 as the government and households cut spending and businesses freeze investment.
The Chilean economy is open, exports and imports are worth 65% of GDP and Chile has signed 30 Trade Agreements with 70 countries, covering 88% of global GDP. However, some of the opportunities for further progress include diversifying its economy, ensuring energy availability, living with drought, promoting innovation, increasing productivity, and tackling inequality. Chile is looking to overseas partners for assistance in all these areas.
Chile has a long trading history with the United Kingdom, dating back to the late 19th century. It was one of the first countries to sign a new trade continuity agreement with the UK after it left the European Union, and there are many business opportunities in Chile for UK companies across a wide range of sectors. Studies have shown that there is significant “like mindedness” in business relationships between the two countries.