Latin American Economic Outlook 2021

Chile

1. Socio-economic and perceived impacts of the coronavirus (COVID-19) pandemic

The crisis has been hard on Chile. Gross domestic product (GDP) contracted by 5.8% in 2020, compared to a year earlier. In 2020, poverty increased by 0.2 percentage points to reach 10.9% according to the latest international comparable estimations available, one of the lowest rates in the Latin America and the Caribbean (LAC) region (30.9%). Extreme poverty (1.6%) is also one of the lowest in LAC (average 10.0%). Between March 2020 and May 2021 schools were fully closed for 14 weeks, much lower than the LAC average (26 weeks) and close to the Organisation for Economic Co-operation and Development (OECD) average (15 weeks). The negative impact on education was partially offset by online learning, which was present in 38.7% of schools, higher than in LAC (32.5%) but significantly lower than in the OECD (54.1%). The healthcare system was put under pressure by the pandemic, but earlier investment by the government functioned as a cushion. Public expenditures on health have risen by two percentage points in the last decade to reach 8.9% of GDP, close to the OECD average (8.8%) and much higher than the LAC average (6.8%). However, people’s perceptions of the quality of health services deteriorated. In 2020, only 34.2% of people declared being satisfied with health care, down by six percentage points in a decade. This figure is lower than in LAC (48.2%) and the OECD (70.7%). According to Gallup data on citizens’ perception, in 2020, 84.9% of Chileans perceived the government as corrupt. This figure compares to 72.4% in LAC and 58.8% at the OECD level.

2. National and international co-operation initiatives aimed to build forward better

Since the start of the COVID-19 pandemic, Chile deployed a co-ordinated and far-reaching strategy to support the most vulnerable households, workers and enterprises. Chile effectively mobilised resources to expand and strengthen the social protection network for nearly 17.68 million Chileans. To support households, Chile allocated around USD 1.2 billion through the emergency cash transfer programme (Ingreso Familiar de Emergencia) for formal and informal households whose incomes were negatively affected by the crisis. Likewise, Chile implemented Bono COVID-19, a special transfer scheme aimed at supporting the most vulnerable families. Additionally, to protect middle-income households, Chile provided Bono Clase Media. To sustain workers, Chile established extraordinary transitory measures (Ley de Protección del Empleo) to protect income stability and jobs for formal workers. In addition, Chile implemented an employment subsidy as an economic reactivation measure to encourage hiring and retention of workers. To support micro, small and medium-sized enterprises, Chile instituted a fund for loans by providing guarantees (FOGAPE), established additional credit lines and provided tax refunds. Last, Chile encouraged programmes that provide technical assistance and promote digital and technical skills for MSMEs and enhance productivity for firms in this sector (Digitaliza tu Pyme, Ruta Digital, Pymes en Linea, Pymes de Barrio, Elijo Pyme, Espacio del Emprendedor and Despega Mipe).

Going forward, Chile designed the public investment plan for the period 2020-22, which aims to solve social and productive transformation demands and the water shortage threats. Special emphasis has been placed on projects that contribute to accelerating the transition to sustainable development and to mitigating and adapting to climate change. Moreover, Chile is taking a series of measures to support market competitiveness, including new transparency requirements and a new digital model regarding the means of payment.

As part of Chile’s international co-operation framework within LAC, the Chile-Mexico Joint Cooperation Fund transferred over USD 1 million to the country for the acquisition of medical supplies to face the COVID-19 pandemic. Beyond LAC, Chile takes part in the Bilateral Fund for Development in Transition Chile-European Union, which allocated EUR 365 million to its newest project to provide support for the recovery of prioritised productive sectors of the macro-central-southern region of the country within the framework of COVID-19. The project aims to support the economic recovery of four regions of the country and to develop specific actions to boost employment. In addition, as a result of Chile’s engagement with Japan’s socio-economic development programme, the country became a beneficiary of a non-refundable USD 4.6 million financial donation to purchase medical equipment, which will be used in various health centres in the country.

 

	Key indicators – Chile1
Socio-environmental	Chile		LAC2		OECD3
	2017	2020	2019	2020	2019	2020
Extreme poverty4	1.4	1.6	8.1	10.0	N/A	N/A
	2017	2020	2019	2020	2019	2020
Poverty5	10.7	10.9	26.8	30.9	N/A	N/A
	2009	2017	2009	2019	2009	2018
Gini index6	0.48	0.45	0.50	0.46	0.31	0.31
	Bottom 20%	Top 20%	Bottom 20%	Top 20%	Bottom 20%	Top 20%
Total population in informal households by quintile, 20187	34.9	9.4	78.8	19.3	N/A	N/A
	2010	2017	2010	2017	2010	2017
Health expenditures8	6.8	8.9	6.5	6.8	8.1	8.8
	2010	2017	2010	2017	2010	2017
Out-of-pocket health expenditures9	34.5	33.5	35.6	34.1	20.2	20.6
	03/2020-05/2021
Weeks of full school closure10	14		26		15
	2018
Effective online learning11	38.7		32.5		54.1
	2018
Effective online learning in disadvantaged schools11	25.2		21.5		48.8
	2009	2019	2009	2019	2009	2019
Share of Internet users12	41.6	82.3	29.3	67.8	68.3	85.8
	2015	2018	2015	2018	2015	2018
Number of students per computer13	1.7	1.1	2.4	1.6	1.8	1.1
	2010	2019	2010	2019	2010	2019
Exposure to PM 2.514	21.9	23.7	18.1	18.0	15.7	13.9
	2000-16
% change in intact forest landscape15	-1.4		-8.8		-6.3
Competitiveness and innovation	Chile		LAC2		OECD3
	2009	2019	2009	2019	2009	2019
Labour productivity16	53.1	56.2	29.3	26.7	72.2	70.7
	2009	2019	2009	2019	2009	2019
High-tech exports17	6.6	7.5	8.7	8.3	19.5	17.9
	2009	2017	2009	2017	2009	2017
R&D expenditures18	0.4	0.4	0.4	0.4	2.4	2.5
	2009	2017	2009	2017	2009	2017
ICT patents19	68	19	726	521	173 440	141 358
Citizens’ perceptions and institutions	Chile		LAC2		OECD3
	2009	2020	2009	2020	2009	2020
Citizens’ perceptions of corruption in government20	65.8	84.9	72.0	72.4	67.5	58.8
	2009	2018	2009	2018	N/A	N/A
Citizens’ perceptions of country governed in the interests of few21	61.0	77.4	64.8	82.0	N/A	N/A
	2009	2020	2009	2020	2009	2020
Satisfaction with health care22	40.8	34.2	56.9	48.2	69.2	70.7
	2009	2020	2009	2020	2009	2020
Satisfaction with water quality23	61.0	53.3	76.2	75.2	77.9	79.4
	2010	2016	2010	2016	N/A	N/A
% of people victim of criminality24	16.3	22.4	19.6	23.8	N/A	N/A
	2021
Rank in the Press Freedom Index25	54		82		36
	2009-18
Change in political polarisation26	-2.5		9.6		N/A
	2019
SIGI index27	53.7		25.6		16.3
Fiscal position	Chile		LAC2		OECD3
	2009	2019	2009	2019	2009	2019
Total tax revenues28	17.3	20.7	20.6	22.9	31.6	33.8
	2009	2019	2009	2019	2009	2019
Share of VAT in total revenues29	42.1	39.9	25.3	27.7	19.8	20.7
	2009	2018	2009	2018	2009	2018
Social expenditures30	15.7	16.4	11.3	11.4	21.0	19.7

Sources, footnotes and technical details can be found at the end of the country notes.



1. As best as possible, the table follows the key areas identified in Latin American Economic Outlook 2021: i) socio-environmental aspects; ii) economic competitiveness and innovation; iii) citizens’ perceptions and institutions; and iv) fiscal position.

2. Latin America and the Caribbean (LAC) average is a simple average of the largest set of LAC countries for which data are available in the latest year.

3. Organisation for Economic Co-operation and Development (OECD) average is a simple average that includes all OECD member countries as of May 2021.

4. Data refer to the definition of extreme poverty as specified by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC, 2021_[1]), Social Panorama of Latin America 2020. www.cepal.org/sites/default/files/publication/files/46688/S2100149_en.pdf. Data for 2020 refer to an estimate based on 2019 data, as specified in Annex I.A2 of (ECLAC, 2021). Projections are based on 2017 data for Chile, 2014 for Guatemala and 2018 for Mexico. Applying the same criteria as in previous LEO editions, data selection prioritizes comparability across LAC countries and shows the latest comparable data available at the report’s publication date.

5. Data refer to the definition of poverty as specified by (ECLAC, 2021_[1]), Social Panorama of Latin America 2020, www.cepal.org/sites/default/files/publication/files/46688/S2100149_en.pdf. Data for 2020 refer to an estimate based on 2019 data, as specified in Annex I.A2 of ECLAC (2021). Projections are based on 2017 data for Chile, 2014 for Guatemala and 2018 for Mexico. Applying the same criteria as in previous LEO editions, data selection prioritizes comparability across LAC countries and shows the latest comparable data available at the report’s publication date.

6. Data for LAC from ECLAC, CEPALSTAT | Databases and Statistical Publications, https://cepalstat-prod.cepal.org/cepalstat/tabulador/ConsultaIntegrada.asp?idIndicador=3289&idioma=i. Data for Chile refer to 2017, instead of 2019, data for Guatemala refers to 2014.

7. Data for the OECD from OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm.

8. Indicator provides the distribution of the total population living in informal households by quintile. An informal household has all of its workers in informal work. Quintiles are based on monthly total household consumption or income. The source of this indicator is the OECD Key Indicators of Informality based on Individuals and their Households database, https://stats.oecd.org/Index.aspx?DataSetCode=KIIBIH_B5.

9. Health expenditures as % of gross domestic product (GDP). Data from OECD (2020), Health at a Glance: Latin America and the Caribbean. Share of current expenditure on health. Data are from OECD (2020), Health at a Glance: Latin America and the Caribbean.

10. Data from UNESCO, https://en.unesco.org/covid19/educationresponse#schoolclosures.

11. Data from OECD et al. (2020), Latin American Economic Outlook 2020, www.oecd.org/publications/latin-american-economic-outlook-20725140.htm.

12. Data from International Telecommunication Union (2020), www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx.

13. Data from OECD et al. (2020), Latin American Economic Outlook 2020, www.oecd.org/publications/latin-american-economic-outlook-20725140.htm.

14. µg/m³. Data refer to population exposure to more than 10 micrograms/m³ and are expressed as annual averages. Data from OECD, https://data.oecd.org/air/air-pollution-exposure.htm.

15. Data from OECD, https://stats.oecd.org/Index.aspx?DataSetCode=INTACT_FOREST_LANDSCAPES.

16. Output per employed person as % of United States 2019 output per person employed. Data from the Conference Board, https://conference-board.org/data/economydatabase/total-economy-database-productivity

17. High-technology exports as % of manufactured exports. Data from The World Bank, https://data.worldbank.org/indicator/TX.VAL.TECH.MF.ZS.

18. Research and development expenditure as % of GDP. Data from The World Bank, https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS.

19. IP5 Patent families. Data from OECD, https://stats.oecd.org/Index.aspx?DataSetCode=PATS_IPC.

20. Percentage of people who think that the government is corrupt. “Is corruption widespread throughout the government in (this country), or not?” Data from Gallup 2021.

21. Percentage of people who think that the country is governed in the interests of few. “En términos generales ¿diría usted que (país) está gobernado por unos cuantos grupos poderosos en su propio beneficio, o que está gobernado para el bien de todo el pueblo?” Data from Latinobarómetro, 2020.

22. Percentage of people who think that the health care is of good quality. “In your city of area where you live, are you satisfied or dissatisfied with the availability of quality health care?” Data from Gallup 2021.

23. Percentage of people who think that the water is of good quality. “In your city or area where you live, are you satisfied or dissatisfied with the quality of water?” Data from Gallup 2021.

24. Percentage of people who are victim of criminality, “have you been a victim of any type of crime in the past 12 months?” Data from Latin American Public Opinion Project, www.vanderbilt.edu/lapop/data-access.php.

25. Data from RFS, Reporters without Borders, https://rsf.org/en/ranking_table.

26. Percentage of people who declare being left or right on a 1-10 scale (1=left, 10 = right). “In politics, it is normal to refer to left and right. On a scale where 0 is the left and 10 is the right, where would you place yourself?” Data from Latinobarómetro, 2020.

27. Data from OECD, www.genderindex.org/ranking/.

28. Revenues as % of GDP. Data from OECD et al. (2021), Revenue Statistics in Latin America and the Caribbean (2021).

29. Value added taxes as % of total revenues. Data from OECD et al. (2021), Revenue Statistics in Latin America and the Caribbean (2021).

30. Social protection expenditures as % of GDP. Data from OECD and ECLAC.

References

Conference Board (2015), The Conference Board’s Alternative China GDP, http://www.conference-board.org//retrievefile.cfm?filename=FAQ-for-China-GDP_9nov1511.pdf&type=subsite.

ECLAC (2020), Social Panorama of Latin America, United Nations Publication, http://www.cepal.org/sites/default/files/publication/files/46688/S2100149_en.pdf.

Eurosocial (2021), The roadmap for EU Cooperation on social cohesion, https://eurosocial.eu/en/.

Gallup (2021), Gallup World Poll (database), www.gallup.com/analytics/232838/world-poll.aspx.

ITU (2020), World Telecommunication/ICT Indicators Database 2020, https://www.itu.int/en/ITU-D/Statistics/Pages/stat/default.aspx.

Latinobarómetro (2020), Vanderbilt (database), Latin American Public Opinion Project, http://www.vanderbilt.edu/lapop/data-access.php.

OECD (2021), OECD.Stat (database), Social and Economical Indicators, https://stats.oecd.org/Index.aspx.

OECD et al. (2020), Latin American Economic Outlook 2020: Digital Transformation for Building Back Better, OECD Publishing, https://doi.org/10.1787/e6e864fb-en.

OECD/The World Bank (2020), Health at a Glance: Latin America and the Caribbean 2020, OECD Publishing, https://doi.org/10.1787/6089164f-en.

Reporters without Borders (2021), World Press Freedom Index (database), https://rsf.org/en/ranking_table.

SIGI (2019), OECD.Stat (database), Social Institutions & Gender Index (SIGI), http://www.genderindex.org/ranking/.

UNESCO (2020), COVID-19 impact on education school closure, https://en.unesco.org/covid19/educationresponse#schoolclosures.

World Bank (2020), “Research and development expenditure (% of GDP)”, https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS.

World Bank (2019), “High-technology exports”, https://data.worldbank.org/indicator/TX.VAL.TECH.MF.ZS.