Chile's economic growth, once a hallmark of success in Latin America during the 1990s with an average annual growth rate of 6.2 percent, has seen a significant decline over the past two decades. According to the International Monetary Fund's recent Article IV consultation, Chile's growth has dwindled to just above 2 percent in the 2020s. The IMF report suggests that measures such as faster investment approvals, increased labor force participation, and enhanced public-private R&D collaboration could support higher growth.
The report highlights that while higher-income countries similar to Chile once grew at around 2.9 percent annually, Chile now faces challenges like an aging population and global economic slowdown that these economies did not encounter at their developmental stages. "As countries get richer, sustaining rapid growth simply becomes harder," notes Si Guo and Andrea Schaechter from the IMF.
Comparative analysis indicates that among economies crossing the US$26,000 GDP per capita threshold between 1950 and 2010, median annual GDP growth was about 2.9 percent—higher than Chile's current trend but below its peak in the 1990s.
Demographic trends show Chile’s working-age population growing by only 0.15 percent annually between 2025-2035, impacting potential employment growth rates significantly lower than those seen in comparable countries. Moreover, global technological advancements have slowed compared to the U.S.'s robust performance in the late twentieth century—a factor further restraining Chile's potential growth by approximately 0.8 percentage points.
For sustainable development amid these constraints, structural reforms are deemed necessary rather than short-term macroeconomic stimulus given Chile’s balanced economy. Streamlining regulatory processes for mining projects and modernizing maritime transport regulations are proposed to reduce trade costs and enhance competitiveness.
Improving access to childcare is suggested as a means to boost labor force participation among women—a key demographic shift needed for addressing labor market challenges due to an aging populace.
Chile also lags behind OECD averages in R&D spending; thus greater collaboration between public entities and private sectors is encouraged alongside legislative efforts like a technology transfer bill aimed at commercializing university research outcomes.
Finally, leveraging its status as a leading producer of copper and lithium along with abundant solar and wind resources positions Chile well amidst rising global demand for critical minerals and renewable energy sources.
"While there is no silver bullet for growth," Guo and Schaechter emphasize that such reforms collectively hold promise for improving economic outcomes crucial for enhancing living standards amid social pressures.