Chile-ECONOMY

Gross Domestic Product (GDP): One of Latin America's most economically developed countries, with a diversified, free-market economy. GDP US$33.7 billion (1992). GDP per capita between US$2,515 and about US$2,800 (1992), US$3,160 (1993). During 1990-93 period, poorest 20 percent of population experienced increase in income of 30 percent. GDP growth rate in 1992: 10.4 percent. Slowed to 6 percent in 1993. GDP growth projected by Central Bank to be 4.5 percent in 1994, and by Economist Intelligence Unit (EIU) to be 8 percent in 1995.

Gross National Product (GNP): In 1992 GNP per capita US$2,550; 1.1 percent annual per capita growth rate 1980-90 period. Total GNP in 1990: about US$25.5 billion; 2.8 percent annual growth rate of GNP in 1980-90 period.

Agriculture: Agriculture, forestry, and fishing accounted for 8.2 percent of GDP in 1992, according to EIU, or 6.2 percent according to Inter-american Development Bank (IDB). Exports totaled US$1.2 billion (1991). Major crops--apples, corn, grapes, plums, potatoes, rice, sugar beets, and wheat, as well as forest products. Leading agricultural export--fruit. Leading agricultural imports-- bananas, coffee, corn, cotton, dry milk, rice, soybean, sugar, tea, and wheat. Although free-market oriented, agricultural sector protected by "price bands." Agriculture accounted for 18 percent of labor force (1989-91).

Industry: One of most highly industrialized countries in Latin America. Manufacturing accounted for 20.8 percent of GDP (1992), according to EIU, or 35.9 percent, according to IDB. Industrial exports totaled US$4 billion (1992), surpassing copper exports (US$3.9 billion) for first time, but slowed in 1993. Industry accounted for 20.8 percent of labor force (1992). Mining accounted for 6.7 percent of GDP (1992), with copper still most important product in 1993, despite plunging prices (accounting for 30 percent of total value of exports in 1991). World's leading copper producer since 1982. Estimated 2 million tons of copper produced (1993), up from 1.9 million tons (1992). Opening of new copper mines and increasing output at existing mines expected to boost country's share of world copper production from 17.5 percent in 1990 to about 33 percent in 2000, or 3.3 million tons by 2000. Chile produces about twenty-four nonmetallic minerals, with exports amounting to US$191 million (1993).

Energy: National energy reliance on petroleum and natural gas, 60 percent; hydroelectric power, 25 percent; coal, 15 percent. In 1992 kilowatt capacity 5,769,000; kilowatt hours produced, 22,010 million. Annual rate of change in commercial energy consumption (1980-90), 2.9 percent. However, electricity demand rose by 8 percent in 1993, and growth of more than 6 percent was expected for 1994. Domestic oil consumption estimated 138,527 barrels per day (1991). Oil reserves declining at 10 percent per year; stood at 300 million barrels (1992). Estimated 17.9 billion barrels per day produced in 1991, equivalent to only 13 percent of domestic oil consumption. In 1992 Argentina and Chile agreed to build a trans-Andean oil pipeline. Gas production amounted to about 4 billion cubic meters in 1991. Work began on gas pipeline from Argentina in 1992.

Services: Accounted for 29.1 percent of GDP (1992), according to EIU, or 57.9 percent, according to IDB. Employed 26.4 percent of labor force (1991). Tourism one of key service industries. Total visitors--half of them from Argentina--grew from 1.35 million in 1991 to estimated 1.5 million in 1992; visitors spent estimated US$900 million in 1992 and 1993.

Exchange Rate: On August 5, 1994: 413.8 Chilean pesos (Ch$) per United States dollar, compared with 411 in August 1992 and 573 in August 1984. Three important changes in "crawling peg" exchange-rate policy during 1985-92 included first centering "reference" exchange rate set by Central Bank within a 6 percent intervention band; then, in January 1992, widening band to 10 percent and adjusting reference rate downward, and then making daily adjustments in relation to a currency basket (United States dollar; German mark, and Japanese yen). Annual devaluation running at 13 percent to 16 percent.

Balance of Payments: Continued trade surpluses since 1982 led to accumulation of unprecedented US$9.9 billion in international reserves by end of 1993. Country's foreign investment inflow in first eleven months of 1993 rose to US$2.3 billion, a 92 percent increase over the same period of 1992. Current account deficit in 1993 estimated at about 4.5 percent of GDP, or US$1.9 billion. Expected to broaden to US$2.4 billion, or 5.3 percent of GDP, in 1994. However, capital account surplus in 1993 created US$800 million overall balance of payments surplus (US$50 million more than in 1992). Balance of payments surplus in 1994 estimated at only US$100 million, with a current account deficit of US$2.4 billion.

Imports: Principally petroleum, wheat, capital goods, spare parts, motor vehicles, and raw materials, mainly from European Union (EU), United States, Japan, and Brazil. Imports expenditures in 1993 estimated at US$10.1 billion, with 20 percent growth of imports of capital goods. Liberal import policy. Import duty a flat 11 percent for most products, except for expensive luxury goods or commodities governed by price band, which often carry additional surtaxes; regional accords aiming to cut tariffs to zero. Imports also subjected to 18 percent value-added tax (VAT) on c.i.f. (cost, insurance, and freight) value. Duty-free imports of materials used in products for export within 180 days, with prior authorization. Free-zone imports, if reexported, are exempt from duties and VAT. Central Bank approval is needed for all imports.

Exports: Principally copper (accounting for about 35 percent of exports), industrial products, molybdenum, iron ore, wood pulp, seafood, fruits, and nuts, mainly to EU, United States, Japan, and Brazil. Constituted 34 percent of GDP in 1990; 7 percent annual growth rate 1980-90. International recession and lower commodity prices caused value of exports to fall 7 percent in 1993, but exports constituted about 36 percent of GNP that year. Estimated 1993 total export earnings of US$9.3 billion down by US$800 million, creating country's first trade deficit in more than a decade. In 1991-93 Japan was Chile's largest export market, surpassing Chile's exports to United States. In 1993 Chile was third-largest supplier of wine to United States, after Italy and France.

Foreign Debt: Despite substantial improvement in country's exports, foreign debt rose from US$17.4 billion in 1991 to US$18.9 billion in 1992 (or US$19.1 billion according to International Monetary Fund (IMF)) to an estimated US$20.2 billion in 1993. However, net foreign debt (total debt minus net international reserves) declined from 47 percent of GDP in 1989 to 21 percent of GDP in 1993. By early 1991, Chile was upgraded to status of nonrestructuring country, meaning that its debt was now considered recoverable, thus facilitating access to voluntary capital markets. In June 1991, became first Latin American country to benefit from reduction in debt with United States within framework of President George Bush's Initiative for the Americas agreement. In December 1993, Standard and Poor Corporation, a United States credit rating agency, raised Chile's credit rating from investment-grade (BBB) to BBB+ for long-term debt in foreign currency.

Fiscal Year (FY): Calendar year.

Fiscal Policy: International trade liberalized since 1979. Has had fundamentally sound market economy. Since 1990 democratically elected government has maintained export-led growth, fiscal discipline, and relatively low inflation. Exchange-rate policy, based on daily adjustments of nominal exchange rate and aimed at encouraging exports, has been at center of country's economic success. Gross domestic public investment in 1991: 2.9 percent of GDP; gross domestic private investment in 1991: 15.9 percent of GDP. Gross national savings in 1992: 18.4 percent of GDP. Average annual rate of inflation 20 percent in 1980-90 period. Inflation 18.7 percent in 1991, 12.7 percent in 1992, and 12.2 percent in 1993; projected by EIU to be 10 percent in 1994 and 9 percent in 1995. Unemployment in 1992 about 4.5 percent according to National Statistics Institute. Estimated 1994 budget US$1.14 billion.

Data as of March 1994