CHILE Trends and Developments Contributed by: Felipe Díaz Toro, Victor Riadi and Ignacio Ruiz Rodríguez, EDN Abogados
Global trade policies In the first eight months of 2024, Chile’s trade exchange with the world rose to USD121.59 billion, reflecting a modest 0.2% increase (+USD300 million) compared to the same period in 2023. This growth was primarily driven by a surge in exports of goods. Imports during the same period amounted to USD55.29 billion, marking a 3.7% decline (-USD2.13 billion) compared to the prior year. This decrease was primarily attributed to a 10.7% drop in capital goods (-USD1.26 billion) and a 3.1% reduction in intermediate goods (-USD973 million). On the other hand, exports of goods reached USD66.30 billion, a 3.8% increase (+USD2.43 billion) compared to the same period in 2023. This marked the highest value of foreign sales for a comparable period since records began, showcasing Chile’s strong export performance. According to the World Bank, Chile’s real GDP grew by 1.9% year-on-year during the first half of 2024, driven primarily by the mining sector. Gender gaps in the labour market showed mixed results: while unemployment fell to 7.9% for men, it rose to 9.0% for women. Additionally, the quality of employment deteriorated, particularly for women, as informality levels reached 26.9% for men and 29.9% for women. Macroeconomic trends Global economic recovery Inflation, which had been on a downward trajec - tory, reversed course in March 2024, reaching 4.7% year-on-year by August. Real GDP growth for 2024 was projected to reach 2.5%, converg - ing to potential levels in 2025 and 2026. How - ever, successive electricity tariff adjustments are expected to keep inflation above 4% in the short
term, with a gradual return to the 3% target by the first half of 2026. Poverty (measured at USD6.85/day, PPP 2017) and income inequality are expected to remain at 5% and 43 Gini points in 2024, respectively, with a gradual decline anticipated in subse - quent years. To boost long-term growth, reforms aimed at reducing regulatory barriers, fostering technology adoption, enhancing competition, improving education and management skills, and increasing female labour participation and job quality are vital. Chile’s economy is also poised to benefit from the green transition, thanks to its substantial renew - able energy potential and abundant reserves of critical minerals such as copper and lithium – key inputs for global electrification efforts. Interest rate policies The Board of the Central Bank of Chile recently lowered the monetary policy interest rate by 25 basis points to 5%. This unanimous deci - sion reflects a cautious response to global and domestic economic conditions. Globally, the US economy has demonstrated resil - ience, with labour market adjustments continuing, albeit with some volatility. This has tempered mar - ket expectations regarding the Federal Reserve’s rate trajectory, although uncertainty persists regarding the pace and endpoint of the federal funds rate (FFR). Fed officials have emphasised caution and gradualism in their messaging. Meanwhile, China’s economic activity remains weak, with marginal improvements in certain indicators. Broader external uncertainties, such as ongoing geopolitical tensions, fiscal instabili - ty, potential reconfigurations of global trade, and uncertainties surrounding US policy under the
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