Although Chile may be one of the smaller emerging markets in the Americas, Chile’s GDP has been growing at an annual rate of 4.3% on average since the global financial crisis. Its GDP per capita has been growing at an even faster rate of 5.3%, increasing its viability for investments and exports. Chile has also spent decades establishing strong trade relations with the U.S., Mexico, Canada, China, Malaysia, Indonesia, and many other countries, further supporting the growth of the country’s exports and investments.
From 2000 to 2017, Chile reduced its population living in poverty from 30 percent to 6.4 percent. Through diversifying its economy and investing in its people, Chile has primed itself for accelerated growth.
In November of 2018, the International Monetary Fund (IMF) ranked Chile at the top of emerging markets, commending the reform drive proposed by Chile’s new President, Sebastian Pinera, that is aimed to transform Chile into a developed nation within a decade. While IMF praised Chile’s potential, the bank also encouraged to push forward with structural reforms that would speed up the transition to advanced economy status. IMF added that in order to boost productivity, Chile would need to improve innovation capacity, research and development investment, and labor flexibility.
While Chile has made many advancements and has great potential, its plans for success are not yet realized. Due to its natural resource-based economy, Chile is highly dependent on exports. However, the country’s strong bilateral trades are expected to continue to help sustain growth.
In order to solidify its hold in the emerging markets, Chile will need to continue encouraging innovation, improve the linkage between education and the labor market, and promote the participation of women in the labor market. By enhancing social issues, such as reducing the poverty level further and increasing access to well-targeted social policies will be key for strengthening the middle class and improving long-term prospects.