READ full country note (PDF)
GDP growth is projected to strengthen to around 3% in 2018-19, supported by improving external demand, a more accommodative monetary policy and mining investment. As exports and investment pick up, the labour market will strengthen, reducing income disparities and stimulating private consumption. Increasing aggregate demand and a stabilising exchange rate will bring back inflation towards target.
Monetary policy has eased since the end of 2016, supporting growth and inflation. Fiscal consolidation is set to be appropriately gradual in 2018 and 2019 and should remain progressive to raise room for investments in health, education and infrastructure over the medium term. Tackling labour market disparities, and streamlining licencing procedures and regulations, would boost productivity, while reducing inequalities.
The financial system has been resilient to a sharp depreciation and a prolonged growth slowdown. However, continued monitoring of increasing household and corporate vulnerabilities is needed as financing costs could increase. The adoption of draft laws implementing Basel III requirements, strengthening the oversight of financial conglomerates and creating a centralised register for bank and non-bank credit providers would all improve financial supervision.
Economic Survey of Chile (survey page)