IMF Staff Country Reports

This 2022 Article IV Consultation with Chile discusses that after an impressive recovery from the coronavirus disease 2019 pandemic, the Chilean economy is undergoing a necessary transition toward sustainable growth amid a challenging external environment. Policy implementation remains very strong, geared toward correcting macroeconomic imbalances that built up during the pandemic while protecting the most vulnerable and advancing structural reforms, consistent with past IMF advice. The outlook is clouded with risks. On the external front, these stem from a possible abrupt global slowdown, sharply tighter global financial conditions, commodity price shocks, or an intensification of spillovers from Russia’s war in Ukraine. Domestic risks stem mostly from high inflation persisting for longer than expected, social discontent over high food and energy prices, or slow progress to meet social demands. The constitutional reform process will continue but uncertainty over possible outcomes has narrowed. Against a gloomy and uncertain global backdrop, policies need to navigate growth-inflation trade-offs, safeguard financial stability, and maintain fiscal sustainability while supporting the most vulnerable.