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Home » Economy of the World » Chile
 

Chile Economy
Chile occupies a long and narrow coastal strip of South America and is wedged between Andes Mountain and Pacific Ocean. Almost a decade of accomplished growth rates, Chile began to experience a moderate economic downturn in 1999. This is brought on by unfavorable global economic conditions related to the Asian financial crisis, which began in 1997. The Chile Economy remained torpid until 2003, before it begins to show signs of recovery, achieving 4 per cent real GDP growth. In the year 2004 Chile Economy reached a growth of about 6 per cent. The GDP reached 5.7 per cent in 2005 before falling back to 4 per cent in 2006. This is dynamically market-oriented and is characterized by high level foreign trade. During the early 1990s, Chile earned reputation as a role model for economic reforms.

This was further strengthened when the democratic government of Patricio Aylwin - took over from the military in 1990 and deepened the economic reform initiated by the military government. Chile's GDP averaged 8 per cent between the time period 1991-1997, but fell to almost half that level in 1998 because of tight financial policies.

In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. Between the year 1973-90 military government sold many state-owned companies, and the three democratic governments since 1990 have continued privatization. Policy measures like the privatization of the national pension system encouraged domestic investment, conducing to an estimated total domestic savings rate of approximately 22 per cent of GDP in the year 2000. Government's limited role in the Chile Economy, its openness to international trade and investment, and the high domestic savings and investment rates that propelled Chile's economy to average growth rates of 8 per cent. Unemployment reached the maximum during Chile's traditional 4 per cent-6 per cent range during the recession and is obstinately remained in the range of 8 per cent-10 per cent during the period of economic recovery.



Total public and private investment in Chile Economy has remained high despite its economic tribulations. Government recognizes the necessity of private investment in order to promote worker productivity. The government is also encouraging diversification, in such non-traditional exports like fruit, wine, and fish. This is done in order to reduce the relative importance of basic traditional exports such as copper, timber, and other natural resources. Chile's economy is thoroughly reliant on international trade. In 2006, exports increased to $59.0 billion from $40.5 billion in it sprevious year.After the reformation of the banking law in 1997 Chile's financial sector is the faster growing area than any other areas of economy during the last few years.