IMF Staff Concludes Visit to Chile

IMF News, March 28, 2022

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An IMF mission led by Ana Corbacho visited Santiago, Chile, during March 21-25, 2022, to discuss recent economic developments, the COVID-19 pandemic, the war in Ukraine, and implications for Chile’s policy priorities.
End-of-Mission press releases convey preliminary findings after a visit; the views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
This mission will not result in a Board discussion.

Chile’s recovery is well underway and economic activity exceeds pre-pandemic levels.
GDP developments:
- GDP declined by 6 percent in 2020.
- GDP rebounded by 11.7 percent in 2021, buoyed by a large and coordinated policy response, widespread vaccination, and high copper prices.
Inflation and expectations:
- Inflation reached 7.8 percent in February.
- Two-year inflation expectations edged up to 3.7 percent.
Monetary policy:
- The central bank has rapidly increased the monetary policy rate in response to inflationary pressures.
Fiscal stance:
- The 2022 approved budget envisages phasing out the COVID-19 fiscal stimulus measures and rebuilding fiscal buffers.
- As the recovery takes hold, the government is embarking on fiscal consolidation guided by the fiscal rule.

Continue removing macroeconomic stimulus to help mitigate risks and inflationary pressures.
Fiscal policy should continue providing targeted support to the most vulnerable, given lagging job recovery in certain sectors and higher global food and fuel prices.
Maintain macroeconomic stability and fiscal sustainability while pursuing a far-reaching reform agenda to tackle inequality, protect the most vulnerable, and foster a green economy.

Global risks and uncertainty are elevated, including from the war in Ukraine and its global ramifications.
Specific risk channels cited:
- Rising global food and fuel prices.
- Further supply chain disruptions.
- Sharply tighter global financial conditions.
- An adverse turn of the pandemic.
Offsetting strengths:
- Chile benefits from high copper prices.
- A sustained track record of very strong policies and institutional frameworks, and relatively low public debt enhance Chile’s resilience and capacity to respond to shocks.

The IMF mission thanked the authorities for their hospitality and fruitful discussions and looks forward to continuing close cooperation with Chile in the period ahead.

IMF Communications Department — Press Release No. 22/94, March 28, 2022