The World Bank In Chile

Amid an uncertain external outlook, Chile’s economy is adjusting after the extraordinary expansion of 2021. Real GDP growth slowed down to 2.4 percent in 2022 as consumption normalized amid a sharp fiscal and monetary policy contraction.

Economic adjustment is expected to continue in the first half of 2023 led by a further drop in consumption amid contractionary policies, depleted household liquidity and a weakening labor market. The economy is projected to recover gradually in the second half of the year leading to an annual decline of 0.7 percent for 2023, driven partially by a negative base effect from 2022.

Inflation could remain high in the short term given some inertia but is projected to converge to target by end-2024 amid a negative output gap and receding cost pressures.

Amid high inflation and stagnation, poverty (US$6.85 a day PPP) is projected to remain at around 11.5 percent and the Gini coefficient at 0.46 in 2023, and they are not expected to return to pre-pandemic levels in the medium term.

Medium-term prospects will be shaped by the capacity to generate more inclusive, productivity-driven growth while preserving sound macroeconomic fundamentals.

Last Updated: Apr 03, 2023

The World Bank Group (WBG) has supported Chile's development for 75 years, through a range of instruments including loans, insurance, grants, technical assistance, and knowledge sharing.

By supporting cross-sector coordination, the WBG seeks to advance solutions to the challenges for Chile to achieve sustainable and inclusive development built upon three interdependent pillars, namely improving equal opportunities, increasing regional equity, and promoting green and sustainable growth.

Since Chile received the first World Bank development loan made to a country outside of Europe in 1948, it has engaged in a joint learning process to address major development challenges. Cooperation with Chile strengthened after the opening of the first WBG office in Santiago in December 2017. We work closely with various ministries, public service agencies, regional and provincial governments and the vast majority of municipalities, to which we deliver technical assistance and support for designing public policies in priority areas.

A new partnership framework with Chile is currently in preparation as well as a range of innovative projects to improve social inclusion and climate change resilience.

We are committed to supporting Chile in achieving more inclusive and sustainable growth, with a particular focus on increasing vulnerable people access to quality social services, such as health, and addressing critical environmental challenges, like water resource management.  We are also supporting Chile's global leadership in the green transition, as it builds  a green hydrogen industry.

Together with the WBG's International Finance Corporation (IFC), we are supporting Chile to strengthen its private sector toward creating  a more productive and inclusive society. IFC's program in Chile has strategically focused on inclusion, innovation, and sustainability. It currently comprises 14 projects in high impact areas including renewable energy, micro, small and medium-sized enterprises and gender financing, sustainable agriculture, and tertiary education. We are also working to identify investment opportunities in green hydrogen, blue economy, and circular economy.

Moreover, the WBG’s Multilateral Investment Guarantee Agency (MIGA) provides support to the financial sector to grant loans to small and medium-sized enterprises, mainly those owned by women and those seeking a green economic recovery.

Last Updated: Apr 03, 2023

The World Bank (WB) has worked together with successive Chilean administrations in areas such as energy, infrastructure, water, education, social protection, health and others, to design public policies aimed at improving the lives of Chileans. Below are but a few recent examples of this work.

The Ministry of Education, based on a simulation tool provided by the WB, could measure the impact of COVID-19 on learning and schooling in Chile, in 2020. Later, in 2021, the WB education specialists systematized and reviewed Chile's educational policies and measures in the context of the pandemic.

With WB support, the Ministry of Health is carrying out an international comparative evaluation of the National Immunization Program and a study on how routine health services were disrupted during the COVID-19 pandemic. Another study focused on the financing of high-cost treatments in Chile.

In coordination with the Ministry of Social and Family Development, the WB is carrying out the Local Social Management (GSL is the Spanish acronym) project, a new methodology for the unified delivery of social services and benefits in municipalities. A one stop shop gives officials access to beneficiaries’ various allowed programs and subsidies. Better social care is thereby delivered, in addition to permitting more efficient public spending. The program is planned to include a new module for employment and employability support and as a tool to support the design of local child services offices. This will allow for the delivery of integrated services to children and their families.

Furthermore, the World Bank has extensively supported Chile's efforts to achieve carbon neutrality and face the effects of drought and the impacts of climate change. Together with the ministries of Environment and Finance, a study ran simulations on the macroeconomic effects of adopting climate change mitigation policies, and demonstrate their beneficial impact on the economy, both in the short and long term.

The World Bank has also worked extensively to address the country's water challenges as part of efforts to further development and resilience. In this regard, it has supported the setting up of the new sub-secretariat for water resources, among other efforts.

Since 2020, with the support of the Spanish Fund for Latin America and the Caribbean (SFLAC) and the initiative for the development of carbon pricing instruments "Partnership for Market Readiness" (PMR), the World Bank is supporting various components of Chile's National Green Hydrogen Strategy. A study contributed to designing the guidelines to set up Chile’s green hydrogen certification scheme compatible with the international and national markets. Another study focused on the safety standards for the use of green hydrogen in mining, among others.

An additional field of collaboration is the prevention of gender violence. To support the Ministry for Women and Gender Equality, we prepared a cross-section diagnosis to identify the main critical issues hampering the network of state services from providing an adequate and timely response to survivors of violence against women.  This  would help to draw a roadmap to set up an integrated case management platform for the prevention of gender violence across the country and set up coordination systems for state action to help thousands of gender violence victims. Initial tasks to build the integrated platform started in 2022, together with the National Service for Women and Gender Equality.

Chile’s experience and learnings have been shared with other countries in the region and around the world facing similar development challenges. Chile has hosted delegations from Ecuador, Pakistan, Cambodia, Palestine, Romania, Bulgaria, Nicaragua, Guatemala, the Ivory Coast, Burkina Faso and Niger interested in learning about Chile’s experience in social protection.

Last Updated: Apr 03, 2023