Chile economic outlook will be challenging this year

Significance

However, it now anticipates that the contraction will be 1.0%, down from a previous forecast of 1.5%. This is in line with recent Chilean Central Bank forecasts of a softer-than-expected landing from the economy’s overheating in 2021. In this context, persistent inflation remains the key economic concern.

Impacts

• According to the IMF, Chile’s per capita income will drop by 1.9% this year and not recover the lost ground until 2025.
• In 2023, weak investment will negatively affect employment, particularly in the construction sector.
• Given its imbalances, Chile’s small, open economy will be more than usually vulnerable to external shocks.