A GDP growth of 5.2% is hardly striking compared with the destructive 8.8-magnitude earthquake or the Copiapó mining accident of last year – and definitely not a new record high in Chile’s recent history – but economic tenacity has laid solid groundwork for Chile becoming the first developed economy in Latin America despite such obstacles.
Becoming the first developed economy in Latin America by 2018
Having grown at a year-average of more than 5% in the past two decades, Chile, the freest economy in Latin America, offers not only a stable macroeconomic environment – high per-capita GDP (US$12,000 in 2010) and low inflation rate (1.4% in 2010) but steadfast business prospects for foreign traders and investors.
Despite the disastrous 8.8-magnitude earthquake in February 2010 (the sixth strongest recorded since 1900), the Chilean economy triumphed on the back of sustained commodity prices and reconstruction efforts. The hard-fought battle to grow the economy ended last year with an encouraging rise of 5.2%. That laid the groundwork for the challenging goal of becoming the first developed economy in Latin America by 2018.
To achieve the target, the Chilean economy will have to grow at an average annual rate of not less than 6% through 2018. If it’s met, Chileans can enjoy a per-capita GDP of US$22,000 (measured in purchasing power parity (PPP) terms) by that date.
There is still a lot of work to be done before reaching the 2018 target. As the first country in South America to join the Organisation for Economic Cooperation and Development (OECD) in May 2010, Chile has received ringing international endorsement of its economic progress.
Leveraging on the red gold
Being the world’s mining capital, Chile benefits from high international commodity prices, particularly the price of copper. With the copper price averaging US$3.42 per pound, copper mining accounted for 5.5% of the country’s GDP in 2010, while mining altogether contributed 6.7%.
Home to one-third of the known copper reserves on Earth, Chile is not only the world’s largest copper producer, but the largest exporter of the red metal. With mining products representing more than 60% of the total exports, Chile mined one-third of the world’s copper in 2010 (some 5.4 million tonnes). Up 43% from the previous year, Chile’s copper export revenue exceeded US$39 billion in 2010.
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