Chile 2013 Blog: Felipe Larraín, Minister of Finance of Chile

At AS/COA’s 2013 Santiago conference, Chile’s minister of finance gave a macroeconomic overview of his country’s economic wellbeing, focusing on foreign trade. Larraín prefaced his presentation by stating that while many believe a country’s economic path might be predestined, he believes this is not the case; a country can chose its own destiny.

For Chile, the global economic situation is of great importance, said the minister, though domestic policies also play an important role. Chile is one of the most open and integrated countries in the world in terms of trade, he noted. The Southern Cone country has 22 trade pacts with 60 countries and 93.5 percent of its exports in 2012 went to these countries. Furthermore, 90 percent of Chile’s imports come from these same countries.

In particular, China’s importance grew enormously over the last two decades, with exports to the Asian giant growing from 0.4 percent in 1990 to 23 percent in 2012, said the minister. China is now Chile’s main trading partner, added Larraín, which means the government is paying close attention to its current economic deceleration. Conversely, the European Union took 40 percent of Chile’s exports in 1990. In 2012 the figure stood at 15 percent, he said.

Trade between Chile and other Latin American economies expanded in the same period. Latin America as a region constitutes 8 percent of global GDP, said the minister, giving this number context by adding that the United States makes up 22 percent of the world’s economic output, the European Union 23 percent, and China 11.5 percent.

Currently, Latin America is growing at a much healthier tick than developed economies, said Larraín. In particular, this applies to Colombia, Mexico, Panama, and Peru, all of which are in the Pacific Alliance (Panama is expected to finalize membership soon).

The Alliance has a combined GDP of $2 trillion, a population of 210 million, and a per capita GDP of $10,000, he said. And while this is an association of countries with many things in common, the union is not politically motivated, but rather, a coming together of common ideas around economic development and global trade integration, added Larraín. The bloc makes up 35 percent of Latin American GDP, and also 35 percent of the region’s population.

The finance ministers of the Pacific Alliance countries will convene in late August to continue to set plans for economic and trade integration, said the minister. The Chilean government, said Larraín, considers the Pacific Alliance one of the most interesting trade developments to arise in the region in a long time. 

Watch the video (in Spanish):