Chile

Chile is a country of striking contrasts, not only geographically, from the Atacama Desert to the Patagonian fjords, but also economically and socially. For several decades, the country experienced strong economic dynamism, accompanied by a significant reduction in poverty, an expanding middle class, and institutional progress that helped it become a high-income country and the first in South America to join the OECD. Chile also consolidated a sound macroeconomic framework, deepened its integration into global trade, and developed competitive export sectors, particularly in mining, agriculture, and services.

In recent decades, however, this dynamism has lost momentum, amid slower productivity and per capita GDP growth. To continue advancing on its development path, Chile has an opportunity to address challenges that still constrain its potential by facilitating investment, strengthening innovation and the adoption of new technologies, developing the skills demanded by the labor market, and improving the capacity and efficiency of the state and the quality of public services.

At the same time, global transformations associated with the energy transition and artificial intelligence are opening new opportunities for Chile. Its leadership in critical minerals, its renewable energy potential, and the development of new water sources can help create quality jobs and foster more dynamic, higher-value-added growth.

In this agenda, Chile can benefit from international experience and adapt innovative solutions to its own challenges, while sharing its experiences and lessons with other countries.

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Over the past decades, Chile’s growth has lost momentum: per capita GDP growth declined from 3.2 percent in the 2000s to 1.6 percent between 2020 and 2025. The fiscal position has also deteriorated: the structural balance target was missed in 13 of the past 20 years, public debt is approaching the self-imposed ceiling of 45 percent of GDP, and the sovereign credit rating has been downgraded by two notches, although it remains investment grade.

Poverty, measured at the US$8.30-a-day threshold (2021 PPP), declined steadily, except in 2020, to 4.5 percent, the lowest level in the region. Income inequality also declined and is converging toward the regional average. Although multidimensional poverty has fallen, between 15 and 30 percent of households still face deprivations in education, employment, housing, security, and inclusion.

Following GDP growth of 2.5 percent in 2025, the economy lost momentum in the first half of 2026, with GDP contracting by 0.3 percent year-on-year amid supply disruptions and weaker domestic demand. Mining production fell by 4.7 percent due to lower ore grades and maintenance-related disruptions, while adverse weather conditions affected agriculture and fisheries. Inflation rose to 4.3 percent, driven by higher international oil prices, weighing on real wages and private consumption. In the labor market, unemployment increased from 8.0 percent in December 2025 to 9.4 percent in June 2026, reaching 10.4 percent among women.

Real GDP growth is projected at 0.8% for 2026, reflecting the weak carryover from the first half of the year. Growth is expected to recover to 3.0% in 2027, supported by the normalization of mining activity, a rebound in investment, high copper prices, and reforms aimed at facilitating investment. Inflation is projected to converge to the Central Bank's 3% target by mid-2027.

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The World Bank Group (WBG) has supported Chile's development for more than 75 years through a range of instruments, including loans, insurance, grants, technical assistance, and knowledge exchange with countries from different regions of the world.

Since receiving in 1948 the first World Bank development loan made to a country outside Europe, the relationship with the country has continued to evolve through a joint learning process aimed at addressing its greatest development challenges.

The World Bank's active sovereign financing portfolio in Chile comprises two operations totaling US$450 million, aimed at strengthening primary health care and supporting the country's water transition. In addition, the Bank administers a US$26 million Reducing Emissions from Deforestation and Forest Degradation (REDD+) Program and a US$5 million grant to support the implementation of carbon pricing instruments and carbon markets.

Collaboration with Chile also includes Reimbursable Advisory Services (RAS), technical assistance, and analytical work in areas such as health financing, hospital productivity, and cancer care; social protection and childcare; public spending efficiency and state modernization; financial crisis management; productive development; and the strengthening of public statistics. This agenda also encompasses digital transformation, artificial intelligence, and the adoption of new technologies, together with initiatives in water security, drought resilience, sustainable mining, multimodal connectivity, and regional corridors.

Knowledge exchange is another pillar of this relationship. Experiences and solutions developed in Chile in areas such as social protection, disaster risk management, and education are shared with other countries, helping consolidate Chile as a knowledge platform and international reference point.

As of August 2026, the International Finance Corporation (IFC) maintains an active investment portfolio of US$2.663 billion in Chile across key sectors such as finance, infrastructure and manufacturing, agribusiness, and services. IFC complements this financing with advisory services in financial inclusion, digital transformation, productivity, water management, and sustainable finance instruments.

Chile is a priority country for the Multilateral Investment Guarantee Agency (MIGA), serving as a reference point for scalable, replicable, and innovative guarantee solutions that mobilize private capital. In recent years, MIGA has strengthened its engagement through credit enhancement guarantees for Chilean state-owned enterprises, attracting international private financing for priority public investments and supporting inclusive growth. Its strategic focus spans energy security, sustainable mining, financial inclusion, and priority transport infrastructure. MIGA's guarantee portfolio in Chile totals US$2.3 billion, with 32% exposure to the financial sector and 68% to the real sector.

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