The Economy of Chile: A Promising Destination for Investors

Chile is a South American country that has been attracting foreign investors for decades, thanks to its stable political and economic environment, open trade policy, and abundant natural resources. In recent years, Chile has also made significant progress in social and environmental issues, such as reducing poverty, improving education, and promoting renewable energy. These factors make Chile an attractive destination for investors who are looking for opportunities in emerging markets.
Chile’s economy is one of the most dynamic and diversified in Latin America, with a GDP of US$282 billion in 2022, ranking 40th in the world. The country has maintained an average annual growth rate of 3.4% since 1990, despite facing external shocks such as the global financial crisis, the commodity price slump, and the Covid-19 pandemic.
Chile’s economic resilience is largely due to its sound macroeconomic management, which includes a flexible exchange rate, an inflation-targeting monetary policy, a fiscal rule that limits public spending, and a sovereign wealth fund that accumulates fiscal surpluses. Chile also has a strong institutional framework, ranking 26th in the world in the World Bank’s Ease of Doing Business index, and 28th in the World Economic Forum’s Global Competitiveness index.

Chile’s Past and Predicted GDP, Statista 2024

Chile’s economic outlook for 2023 and beyond is positive, as the country recovers from the impact of the pandemic and the social unrest that erupted in 2019. According to the International Monetary Fund (IMF), Chile’s GDP is expected to grow by 6.2% in 2023, and by 3.5% in 2024, above the regional average. The IMF also projects that Chile’s inflation will remain within the central bank’s target range of 2-4%, and that its current account deficit will narrow to 1.4% of GDP by 2024.  These are all signs of notable economic stability, ones in which would be incredibly suitable for international investment into the country.

Chile offers a wide range of investment opportunities for foreign investors, especially in sectors such as mining, energy, infrastructure, technology, and tourism. Chile is the world’s largest producer and exporter of copper, accounting for 28% of global output and 36% of global exports in 2022. Chile also has significant reserves of other minerals, such as lithium, gold, silver, and molybdenum, and is developing its potential in green hydrogen production.
Chile received $20.86 billion of FDI inflows in 2022, a 30.95% increase from 2021. The main sectors that attracted FDI were mining, energy, and services. Chile has a framework law for foreign investment that grants equal treatment, free remittance of profits, and access to foreign exchange to foreign investors. According to UNCTAD, FDI flows to Chile are expected to rise in 2024, driven by several large acquisitions and renewed interest in the mining and tech industry.

Chile’s FDI as a % of it’s GDP, The Global Economy 2022

Chile’s energy sector is undergoing a rapid transformation, as the country aims to achieve carbon neutrality by 2050 and to phase out coal-fired power plants by 2040. Chile has abundant renewable energy resources, such as solar, wind, hydro, and geothermal, and is the leader in non-conventional renewable energy (NCRE) among emerging economies, according to BloombergNEF’s Climatescope ranking. Chile also has a robust and interconnected electricity grid, and is part of the regional energy integration initiative with Argentina, Brazil, Colombia, and Peru.

Chile’s infrastructure sector is one of the most developed and competitive in Latin America, with a network of highways, ports, airports, railways, and telecommunications that facilitate trade and connectivity. Chile has a long tradition of public-private partnerships (PPPs) in infrastructure, with more than 80 projects awarded since 1993, totaling US$20 billion in investment. Chile also has a pipeline of new infrastructure projects, such as the expansion of the Santiago metro, the construction of a new airport terminal, and the development of digital and water infrastructure.
Chile’s technology sector is one of the most innovative and dynamic in the region, with a vibrant ecosystem of startups, accelerators, incubators, venture capitalists, and universities. Chile has been ranked as the most innovative country in Latin America by the Global Innovation Index, and as the best country in the region to launch a startup by the Startupblink report. Chile also has a strong digital infrastructure, with the highest internet penetration and mobile broadband coverage in Latin America, and a network of submarine cables that connect the country with Asia, Oceania, and North America.

Chile’s tourism sector is one of the most diverse and attractive in the world, with a variety of natural and cultural attractions, such as the Atacama desert, the Patagonia glaciers, the Easter Island statues, and the wine valleys. Chile has been recognized as the best adventure travel destination in the world by the World Travel Awards for four consecutive years, and as the best destination for sustainable tourism by the Green Destinations Foundation . Chile also has a modern and competitive tourism industry, with high-quality hotels, restaurants, and services.
Chile offers a number of incentives and benefits for foreign investors, such as a transparent and non-discriminatory legal framework, which guarantees equal treatment for domestic and foreign investors, and protects their property rights and contracts. A low and simple tax regime, which applies a flat corporate tax rate of 27%, and allows foreign investors to defer the payment of income tax until they repatriate their profits. Finally, they have a free trade policy, which grants preferential access to more than 60 countries, covering 86% of global GDP and 63% of global population, through 29 trade agreements.
Chile is a promising destination for investors who are looking for opportunities in emerging markets, as it combines a stable and prosperous economy, a diversified and dynamic productive structure, and a favorable business environment. Chile also offers a range of incentives and benefits for foreign investors, such as a transparent and non-discriminatory legal framework, a low and simple tax regime, a free trade policy, and a foreign investment promotion agency. Chile invites investors from all over the world to discover its potential and to contribute to its development and social progress.

References: 
Financial Times. (2021, April 27). Special Report Investing in Chile. https://www.ft.com/reports/investing-chile
Government of Chile. (2022, September 12). Chilean government launches the “Let’s invest in Chile” plan, which aims to increase investment through 28 specific measures. Gobierno de Chile - Gob.cl. https://www.gob.cl/en/news/chilean-government-launches-the-lets-invest-in-chile-plan-which-aims-to-increase-investment-through-28-specific-measures/
Invest Chile. (2023, May). Foreign Investment in Chile 2022. InvestChile Promoting Chile | InvestChile. https://www.investchile.gob.cl/wp-content/uploads/2023/05/informe-preliminar-ied-eng-pdf-2023.pdf
The World Bank. (2022). Foreign direct investment, net inflows (BoP, current US$) - Chile | Foreign direct investment, net inflows (BoP, current US$) - Chile | Data (worldbank.org)