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. By the end of 1999, exports and economic activity had begun to recover, and growth rebounded to 4.4% in 2000. Growth fell back to 2.8% in 2001 and 1.8% in 2002, largely due to lackluster global growth and the devaluation of the Argentine peso. Unemployment remains stubbornly high, putting pressure on President LAGOS to improve living standards. One bright spot was the signing of a free trade agreement with the US, which will take effect on 1 January 2004.

purchasing power parity - $156.1 billion (2002 est.)

2.1% (2002 est.)

purchasing power parity - $10,100 (2002 est.)

agriculture: 11%
industry: 34%
services: 56% (2001)

21% (1998 est.)

2.5% (2002 est.)

5.9 million (2000 est.)

agriculture 14%, industry 27%, services 59% (1997 est.)

9.2% (2002)

copper, other minerals, foodstuffs, fish processing, iron and steel, wood and wood products, transport equipment, cement, textiles

-1.5% (2002 est.)