As a small open economy with a strong dependence on mining and agricultural exports, Chile has been hit hard by the collapse in world trade and commodity prices. Output has fallen sharply and annual average growth is projected to be negative in 2009. However, a good part of the earlier fall in copper prices through end 2008 has been reversed since and activity bottomed out towards mid-year with support from a substantial macroeconomic stimulus. Growth is set to accelerate gradually through 2010 to reach rates above potential in 2011.

Chile is set to become the OECD’s 31st member country. It is a momentous occasion, as captured in the following extracts from speeches by President Michelle Bachelet of Chile and by OECD Secretary-General Angel Gurría, following the signing of the agreement on the terms of accession by the Republic of Chile to the OECD Convention, delivered in Santiago, Chile, 11 January 2010.

Ministers responsible for employment from around the world gathered at the OECD on 28-29 September to discuss the jobs crisis. In our eighth OECD Observer ministers' roundtable, we ask six representatives, from Canada (co-Chair), Italy (co-Chair), Sweden (vice-Chair), France, New Zealand, and Chile, which is a candidate for OECD accession: What new policy actions are you taking to improve the jobs situation in your country?

Address by the President of Chile, Ms. Michelle Bachelet, to the Council of the Organisation for Economic Co-operation and Developpement (OECD), Paris, May, 28th

Economic activity is projected to contract in 2009. The world economic crisis has hit Chile mainly through a deterioration in its terms of trade, as copper prices have fallen sharply, and through tighter financial conditions.

After several years of robust expansion, activity is projected to moderate and inflation to recede. The slowing world economy, tighter financial conditions and lower investments in mining and energy will all slow growth. Inflation will decline gradually as second-round wage increases from high commodity prices wear off and expectations are reanchored to the central bank’s target. Past current account surpluses have disappeared as copper prices have retreated from high levels.

Chile has elected its first female president, in Michelle Bachelet. As head of the left-leaning coalition which has led Chile since the country’s return to democracy in 1990, the new leader has promised continuity, though with a promise of more jobs and social justice. Tackling these issues could indeed make a difference, even if the economy has fared relatively well, as our OECD experts explain.