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Economy

Mineral resources

Chile’s economy has traditionally been based on its mineral resources, agriculture (helped by the country’s unique mix of different climates from north to south), fishing and industry. Although mineral resources account for around half of the total value of exports, they have proved to be a somewhat unstable source of income due to fluctuations in value on the world market and in production levels. It is now mainly foreign companies that exploit the mineral resources in the country.

Diversifying

As a result of fluctuating mineral values, Chile has further developed industry (the country now has the industrial capacity to manufacture goods from its materials) and agriculture (around 15% of the population now work in agriculture).

Economic downturn

Chile’s economy suffered a downturn during the late 1990s. This was due to a number of factors, including a combination of policies imposed to restrict account deficit, and reduced income from exports. This worsened during the 1999 recession when Chile had a drought to contend with alongside the recession, resulting in the first year of negative economic growth the country had seen in 15 years.

Strong financial policies

Chile’s average real GDP growth from 1991 – 1997 was 8%, but this sank to around 4% in 1998. However, throughout this period, the stable financial policies of the country as well as its banks and financial houses ensured that they retained their good reputation.

Recent economic growth

From 2000, the economy grew at a rate of between 2 – 6% each year until 2006, and Chile enjoyed low inflation (3.2% in 2006 – it has not exceeded 5% since 1998) and steady GDP growth. Its economic growth in 2006 was uncharacteristically low compared to other Latin American countries, a result of high energy prices and a slump in consumer demand, and GDP growth during this year of 4%.

Predicted economic growth

According to the Economist Intelligence Unit’s forecast, GDP growth will rebound to 5.9% in 2007, and 5.3% in 2008. Unemployment sank to 7.8% towards the end of 2006, after decreasing for a year. Foreign direct investment into Chile in 2006 reached $5.956 billion, which was a 55% increase on the 2005 total of $3.842 billion.

Related items

Documents and Reports

	Chile property investment report (339Kb)
Documents and Reports

Other related pages

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