Chile Economic Snapshot

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Economic Survey of Chile (February 2021)

Executive summary


Economic Forecast Summary (December 2020)

Chile is set for a gradual recovery over the next two years, with activity returning to its pre-pandemic levels in late 2022. GDP growth will be 4.2% during 2021, after a contraction of 6% in 2020. Private consumption will be a main driver of the recovery, initially sustained by measures implemented by the government to support households, a gradual improvement of the labour market sustained by hiring subsidies and withdrawals from pension funds. Investment will regain momentum at a slow pace, conditional on the evolution of the pandemic, driven by public infrastructure plans, supportive financing conditions and tax incentives. Recovering global demand will also be beneficial.

Solid fiscal and monetary policy frameworks allowed the authorities to pursue bold measures, which prevented a deeper contraction and are avoiding deeper scars from the pandemic. Continuing with an ambitious structural reform agenda, in particular planned reforms to bolster pensions and female participation in the labour force, would sustain an inclusive recovery. Additional public investment, especially in education, the lifelong learning system, active labour market policies, and digital and transport infrastructure, would help strengthen the recovery further.

Special Report: Assessing Chile’s analytical framework for long-term fiscal sustainability

Independent fiscal institutions are key in supporting well-designed fiscal frameworks that ensure long-term sustainability of public finances and adequate fiscal space to meet country needs. The Autonomous Fiscal Council (Consejo Fiscal Autónomo, CFA) is Chile’s independent fiscal institution tasked with contributing to the responsible management of the central government’s fiscal policy. While still relatively young as it started operating in June 2019, the CFA has already established itself as a respected institution relying on a wide range of analytical tools. In the current context, marked by a sharp increase of public debt, it is key to ensure that the models and tools used by the CFA remains “fit-for-purpose” and aligned with international best practices and standards. This report presents advice on how the CFA can further strengthen its models and tools. The report is the result of the work of an interdisciplinary OECD team bringing together expertise on country analysis, macroeconomic analysis and policy advice from across the Economics Department.