Chile, officially the Republic of Chile (Spanish: República de Chile), is a country in South America occupying a long and narrow coastal strip wedged between the Andes mountains and the Pacific Ocean.  The Pacific forms the country's entire western border, with Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage at the country's southernmost tip. Chile claims 1,250,000 km² of territory in Antarctica.

Chile has a market-oriented economy characterized by a high level of foreign trade. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the recession in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Between 2000 and 2006 growth ranged between 2%-6%. Throughout these years Chile maintained a low rate of inflation with GDP growth coming from high copper prices, solid export earnings (particularly forestry, fishing, and mining), and growing domestic consumption. Chile continues to attract foreign direct investment, but most foreign investment goes into gas, water, electricity and mining. Unemployment has exhibited a downward trend over the past year, dropping to 7.8% at the end of 2006. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile signed or ratified a number of trade agreements in 2006, including with China and India. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, South Korea, and Mexico.

The Spanish spoken in Chile is notoriously difficult for foreigners to understand due to the dropping of final syllables and 's' sounds, the very soft pronunciation of some consonants and the high levels of slang employed, particularly in Santiago and the surrounding areas. Chileans also tend to speak much faster than natives of neighboring countries. These factors all contribute to newly arrived visitors to the country, even proficient Spanish speakers, hearing no more than indecipherable mumbles in early encounters with locals.

Market Overview

• The U.S. Chile Free Trade Agreement (FTA) came into force January 1, 2004. Since then, 97 percent of U.S. exports to Chile enter duty free, will all remaining tariffs to be phased out by 2015.
• Bilateral trade between the United States and Chile totaled $16.35 billion in 2006, an impressive increase of 154 percent over bilateral trade in 2003, before the FTA took effect, which totaled $6.43 billion.
• Chile ended 2006 ranked as the 28th largest export market for the United States, climbing from 29th place in 2005, 30th place in 2004 and 35th place in 2003. The United States was the top source of Chile’s imports for 2006 and remained the top destination for Chile’s exports in 2006.
• U.S. exports to Chile in 2006 increased by $4.07 billion over exports in 2003, growing from $2.72 billion in 2003 to $6.79 billion in 2006, or by 150 percent. Chile has also benefited tremendously from the FTA; U.S. imports from Chile grew from $3.71 billion in 2003 to $9.56 billion in 2006, an increase of 158 percent.
• The U.S. is the largest investor in Chile, representing 25.7% of all foreign direct investment. Spain follows closely with 22.0%, and Canada makes a distant third at 15.6%.
• Chile’s economy grew by 4.3 percent in 2006. The Central Bank of Chile projects 2007 GDP growth rates of over 5 percent.
• Sustained GDP growth, low inflation, macroeconomic stability and growing integration with international capital markets mean Chile’s credit rating remains the best in Latin America, with a long-term foreign currency sovereign credit rating of A.