Chile could become Latin America’s first developed country by 2025

Chile’s newly sworn in President Sebastian Pinera (centre) stands next to President of the Senate Carlos Montes (left) and former president Michelle Bachelet at the Congress in Valparaiso, Chile, March 11. (Reuters/Ivan Alvarado)

When Chile’s President-elect Sebastian Pinera told me that Chile may become Latin America’s first developed country by 2025, I was skeptical. But I found that, on second thought, his forecast might not be outlandish.

Pinera, who was inaugurated on Sunday, is a right-of-centre business tycoon who has already served as president from 2010 to 2014. In an interview he told me that his goal will be “to recover the leadership and dynamism we have lost in recent years” and “to transform Chile into a developed country by 2025.”

To its credit, Chile reduced poverty from almost 40 percent of the population at the end of Gen. Augusto Pinochet’s dictatorship in 1990 to 11.7 percent in 2015, by most measures more than any other Latin American country.

While military-clad dictators in Cuba and Venezuela were banging on the table and making fiery revolutionary speeches — scaring away investors and making their countries poorer — a democratic Chile managed to grow steadily under both centre-left and centre-right governments.

But the so-called “Chilean model” started to fizzle in recent years. While the country was growing at an average of 5.3 percent a year during Pinera’s first term, the economy slowed to an average of 2 percent under his successor Michelle Bachelet. Chile’s economy grew by only 1.7 percent last year.

In the interview, Pinera said that his goal to turn Chile into a First World country “is an eight-year project.”

The Chilean Constitution does not allow him to stay in power for more than four consecutive years, but the test of his success will be whether Chileans elect a like-minded candidate in 2021, he said. (No, he won’t support a presidential bid by his wife, he assured me.)

Granted, there are many things that could prevent Chile from becoming a developed country by 2025. For starters, Pinera had forecast in 2012, during his previous presidency, that Chile could reach that status by 2020. That won’t happen.

And some of Pinera’s predecessors had made the similar claims before him, which didn’t materialize, either.

But Chile is not too far behind Portugal, Greece and other countries at the bottom of the list of most developed nations. Chile’s per capita GDP is $25,000 a year, compared with Portugal’s $30,000 a year.

Among the things going against Pinera’s target, Chile — a major copper exporter — may not benefit from the record world commodity prices it enjoyed during his first term.

Also, the new president may not have an easy time carrying out his pro-business agenda. Despite the fact that he won by a comfortable margin in the December elections, he will not have a majority in Congress.

In addition, Chileans are anxious. They have been hearing for decades that they are close to becoming a First World country, and they want to have First World lives. If Pinera doesn’t deliver, he could face street protests that derail his economic plans.

But Pinera will also have several things going for him. Chile’s centre-left opposition coalition has shifted sharply to the left, which will allow him to build alliances with moderate centre-left lawmakers.

“Chile’s leftist alliance suffers from the syndrome of the 50-year-old guy who buys himself a motorcycle and wants to relive his juvenile rebellion,” says Patricio Navia, a Chilean political analyst and professor at New York University. “But most Chileans want stability. That will help Pinera.”

When I asked if Pinera’s vow to turn Chile into a developed country in seven years is realistic, International Monetary Fund’s Western Hemisphere director Alejandro Werner told me that, “It’s not an exaggerated comment.” He added that, based on IMF and other international organizations’ standards, “It is probable that Chile will be classified as a developed country by 2025.”

That would be an accomplishment of both centre-left and centre-right governments that have ruled Chile since the end of the country’s military dictatorship, and it would send a powerful signal abroad. It would be great for Chile, and it would be great for Latin America.