2023 Chile Outlook
2022 was marked by two political milestones that also had repercussions in economic matters. The first milestone was the inauguration of President Gabriel Boric’s government in March with a clear reformist mandate. The second turning point was the rejection of a new constitutional proposal in September, this proposal had arisen due to social unrest in 2019. Both events are related since the rejection of the constitutional proposal shows that citizens are interested in a constitutional framework that supports the country’s growth.The stabilization of the political scenario has positively affected the economy and Chile’s attractiveness for foreign investment.
The strong expansion of 2021, driven by state aid, pension savings withdrawals and greater liquidity for families and companies in the context of the pandemic, explain the International Monetary Fund’s projections of a contraction for the Chilean economy close to 1.5% for 2023. In addition, the inflation rate closed in 2022 at 12.8%, the highest in three decades (the normal inflation level in Chile is between 3% and 4%). This spike in inflation forced the Central Bank on Chile to implement a highly aggressive monetary policy. As a result, the Chilean economy has performed moderately better than expected and inflation is likely to stabilize around 5% in 2023.
Currently, there are two significant concerns on the economic front: the private health insurance system, known as Isapres, is in a delicate financial situation, which could precipitate a reform of the national health system. Also, a reform that proposes the state to become the administrator pension is being debated. Both reforms will have to be approved by Congress. The balanced political composition of this body means that these issues are expected to be discussed in depth.
Mining continues to be the most important economic sector in Chile and it presented substantial boost in 2022 by the rise of the price of copper due to the reopening of the Chinese market. Chile has significant mining reserves that are key to the burgeoning electromobility (EV) sector. Non-metallic mining, particularly lithium, was positioned in 2022 as the main non-copper supply product, with shipments worth more than US$ 7.7 million, an increase of more than seven times the amount exported in 2021.
The energy sector, especially renewable energies, has also experienced great dynamism in recent years. In fact, over the last five years, solar and eolic (wind) energy production has grown from 12% to 22%. The goal of carbon-free energy has boosted investment in this industry, spurring an announced investment of US$ 23 million in the generation and transmission sector.
Search Industry and The Growth of Other Dynamic Areas
Priorities such as sustainability, inclusion, consumer knowledge and habits, digital transformation, and innovation generate activity in many new areas, thus requiring new skills and positions within organizations.
Thus, companies are focussing more on skills than their employees’ specific technical knowledge. Organizations are looking for more agile employees who have the potential to adapt to different challenges. Likewise, changes in the business environment are driving the search for candidates who are prepared to take on transformational roles.
At the executive level, candidates evaluate prospective employers’ cultures, such as the prospective firms’ purpose and flexibility, when considering job alternatives. Other values they seek are the contributions they can make to a larger project, the affective quality or “feeling” that the workplace transmits, the potential for growth and skills development at the organization, the location of the workplace, and hybrid work modes on offer. These requirements have generated a profound change in how companies and the specialists they hire search for and attract the best talent. Organizations are more attractive when they display an authentic corporate brand consistent with these trends.
Diversity, Inclusion and Women
ESG (environmental, social and governance) regulations are now being incorporated to companies’ strategies in concert with policies and practices introduced by global changes and social norms, especially regarding women’s equality in the workforce, thus occupying center stage. A bill called “More Women on Boards” is currently being debated in Chile’s National Congress. This prospective legislation seeks to increase the participation of women on boards of directors of publicly traded companies and corporations supervised by the country’s Financial Market Commission. As of 2026, 40% of the members of boards must be women. This has had and will continue to have a substantial impact on industry, as companies are starting to see it in their best interest to move in advance of this legislation by implementing policies that will see more women not only in senior positions but at all levels of their organizations.
However, a study published by Humanitas/Cornerstone Chile in the Diario Financiero newspaper indicated that by the end of 2022, only 14.3% of chief executives of companies in the IPSA index (Selective Stock Price Index of Chile) that are reported to the Financial Market Commission of Chile were women. Within this group of women chief executives, only 11% are managing core areas of businesses.
The study concluded that the incorporation of women in executive positions is increasing. However, Chilean companies still have a long way to go to comply with ESG goals and future legislation. Diversity will be reached when corporations include women executives in core and specialty areas and consequently can draw from a pool of talented females to serve as directors on genuinely diverse boards.