The IMF has advised Chile to implement structural reforms to enhance its economic growth, which has sharply declined in recent years. Recommended reforms focus on improving investment efficiency, labor participation, and public-private research collaborations. The country’s growth is currently impeded by demographic challenges and a changing global economic environment.
The International Monetary Fund (IMF) on Tuesday emphasized the need for Chile to implement structural reforms to revitalize its slowing economic growth. The IMF suggests that better investment efficiency, increased labor force participation, and enhanced collaboration between public and private sectors in research and development could significantly drive economic expansion.
Chile’s economic growth has notably dwindled over the years, plummeting from an impressive 6.2% annually during the 1990s to under 2% in recent years. This decline has raised urgent discussions regarding the sustainability of the country’s fiscal policies and its various social systems, including pensions and university loans.
Despite significant growth in GDP per capita, which rose from $8,200 in 1990 to an estimated $26,000 by 2025, Chile faces demographic challenges that could hinder future progress. The IMF projects that a mere annual growth of around 1.9% may be expected, primarily due to a stagnant working-age population and external pressures that complicate the economic landscape.
The IMF pointed out specific strategies that Chile could adopt to counteract these demographic hurdles. In a key observation, it stated, “To address demographic challenges, Chile could stimulate labor participation, for example by improving the access to quality childcare that would enable more women to enter the labor force.”
Once considered Latin America’s shining economic star, Chile is now grappling with issues that its counterparts at similar income levels have not faced. These challenges include an aging population and a global economy that does not favor growth as it once did.
Looking ahead, the IMF has laid out a series of reforms that could propel Chile’s economy forward. These include the passage of a technology transfer bill, the streamlining of investment approvals, increasing access to childcare to encourage workforce participation, and capitalizing on its abundance of critical minerals and renewable energy resources to stimulate future economic growth.
In summary, the IMF urges Chile to pursue structural reforms to revive its economy. The decline in economic growth from past decades, coupled with demographic challenges and a changing global market, presents significant hurdles. By focusing on improving investment efficiency, labor participation, and research collaborations, Chile could potentially mitigate these issues and enhance its economic prospects moving forward.
Original Source: thesun.my
