Great Depression in Chile

Economic history of Chile
Colonial era Colonial mining Real Situado Hacienda Encomienda Alerce logging Century of wheat Bourbon reforms
Early republic Independence debt Silver rush Wheat cycle Early coal mining Long Depression
Saltpetre Republic Saltpetre War "Oreros" and "Papeleros" Sheep-farming boom Tierra del Fuego gold rush Meat riots Great Depression
Internal growth Copper mining during World War II CORFO (Production Development Corporation) UN Economic Commission Land reform Copper nationalization Vuskovic plan
Return of liberalism Chicago Boys El ladrillo 1982 crisis "Miracle of Chile" Asian crisis 2004 energy crisis
v t e

The Great Depression that begun 1929 was felt strongly in Chile from 1930 to 1932.^[1] Saltpetre and copper exports collapsed.^[1] The World Economic Survey of the League of Nations declared Chile the worst affected nation by the depression.^[1][2] Such economic devastation worsened Chile's economic prosperity, highlighted particularly in 1932 that exemplifies a rapid fall in exports, imports, GDP and the value of industrial production from pre-depression levels. Chiles exports dropped from US$279m in 1929 to US$35m in 1932,^[3] which in real terms corresponds to 1/6 of export level in 1929.^[2] In accordance to this time period, Chile's imports fell from US$197m in 1929 to US$26m in 1932 (Thorp 1984, p. 333). Similarly, real GDP dropped from 100 in 1929 to 67 in 1932,^[4] contributed by the fall of the value of production from 100 in 1929 to 77 in 1932 alongside a rapid decrease in the average annual production that reached the equivalent to one quarter of 1929 levels in December 1932.^[5] Alongside a decrease in employment in the mining sector, in terms of GDP and productive activity, mining dropped to 26.3 in 1932 from 1929 levels of 100.^[6]

Chile's economic struggles during the Depression were further compounded by a decrease of foreign loans. This contributed to an increase in Chile's budget deficit and reduced government revenue, resultant of their heavy reliance on Foreign financial support, in particular US support, to drive Economic growth pre-depression. Whilst Chile in 1929 received a total of US$338 million of foreign loans, in 1932 they only received US 23 million.^[7] In this same period, Chile's budget deficit rose from 31% of total expenditure in 1931 to 37% in 1932.^[8]