The World Bank In Chile

Chile’s economy made significant progress in resolving macroeconomic imbalances accumulated in recent years. Domestic demand continued to adjust, and inflation waned, although it remains above target. Growth, which averaged just 2 percent in the six years before the pandemic, would need to accelerate for progress.

Boosting productivity growth, which has been declining for decades, will be vital for creating well-paid formal jobs and export diversification. This requires efforts to reduce regulatory barriers, foster technology adoption, promote competition, enhance education quality and managerial capabilities, and increase female labor force participation.

Real GDP contracted 1 percent year on year in the first semester of 2023 mainly driven by the lagged effects of fiscal and monetary contraction in 2022 after extraordinary spending in 2021. The unemployment rate rose 0.7 percentage points y-o-y in June 2023. Female labor force participation grew 2 percentage points y-o-y but remains below pre-pandemic levels.

Poverty (less than US$6.85 a day) dropped from 8.0 percent in 2020 to 4.8 percent in 2022. Income inequality, measured by the Gini coefficient, reached 0.43 in 2022. However, deprivations in non-monetary dimensions, such as health care and social security, increased compared to 2020.

Real GDP is forecast to contract 0.4 percent in 2023 and return to a 2 percent trend growth rate in the medium term. Poverty is expected to increase by 0.4 pp, reaching 5.2 percent in 2023, while the Gini coefficient remains at 0.43.

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.

Since Chile received in 1948 the first World Bank development loan made to a country outside of Europe, it has engaged in a joint learning process to address major development challenges. The opening of the first office in Santiago in December 2017 has allowed us to continue strengthening our collaboration with the country.

This strategy is based on public policy recommendations for Chile to achieve sustainable and inclusive development and on those to develop a stronger private sector for a more productive and inclusive society.

Today, in a challenging global context, Chile is a strategic partner for reshaping development and moving towards greater sustainability and inclusion.

Last Updated: Oct 11, 2023

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

In 2023, Chile received the WB first loan to promote green hydrogen to support climate change mitigation efforts. The project seeks to promote investment in green hydrogen projects in Chile, accelerating the country’s green growth, energy transition and supporting its commitment to carbon neutrality by 2050.

This loan comes after three years working together with the country to support the development of regulations and the enabling environment to facilitate the demand for green hydrogen, both for the domestic and international market. Within the framework of this collaboration, several studies have been carried out that have served as a reference not only for Chile, but also for other countries such as Brazil and Colombia, India, Namibia and Morocco.

In order to provide Chile with financial protection to mitigate potential negative economic impacts of earthquakes and the tsunamis they cause, the World Bank supported Chile’s issuance of a USD 630 million catastrophe bond and swap, its largest single-country operation.  This will provide Chile with readily available funds in the event of a disaster, allowing the country to protect its fiscal budget and reduce the potential need to mobilize debt after an event.

Furthermore, the WB has done an extensive work to address the country's water challenges as an element of development and resilience .

In education, the  “Strengthening of State Universities” project concluded in June 2023, making significant achievements in terms of improved quality and equity, despite the difficult situation left by the pandemic. Third-year dropouts among the most vulnerable students was reduced by almost 10 percent, from 36.6 percent in 2018 to 26.8 percent in 2022. The number of research projects awarded to these universities and the number of professors with doctorates also increased.

In coordination with the Ministry of Social and Family Development, the WB is providing technical assistance to the Local Social Management (GSL is the Spanish acronym) project. This innovative methodology for the unified delivery of social services and benefits in municipalities, is available in almost 70% of the country's municipalities. A one stop shop gives officials access to beneficiaries’ various eligible programs and subsidies. Better social care is thereby delivered, in addition to permitting more efficient public spending. The program continues to grow to incorporate a module for employment support, the support and care network, 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. A module is also being implemented for presidential delegations at regional and provincial levels.

The knowledge we have gained by working together with Chile has been shared with several countries around the world that face similar development challenges. In recent years we have received delegations from every region.