Alberto Naudon: Chile's Economic Outlook

Why It Matters

The outlook confirms Chile’s macro‑economic resilience and signals a stable investment environment, while highlighting risks that could affect regional investors and policymakers.

Key Takeaways

• 2025 growth outperformed, non‑mining near 3% expansion
• Fixed‑capital formation rose ~7%, driven by mining investment
• Inflation projected to hit 3% target by Q1 2026
• Policy rate at 4.5%, indicating mildly contractionary stance
• Risks remain: services inflation, labour slack, global uncertainty

Pulse Analysis

Chile’s 2025 performance surprised to the upside, as the economy rebounded faster than most forecasts. Non‑mining sectors grew close to 3%, while total investment surged nearly 7%, buoyed by robust spending on mining equipment and energy infrastructure. Elevated copper prices and a more resilient global demand environment, especially in the United States, amplified trade gains and helped offset earlier concerns about weak credit and subdued consumer spending. This unexpected vigor has prompted upward revisions to growth baselines and reinforced confidence in Chile’s macro‑economic framework.

Inflation dynamics proved more nuanced. After an early‑year spike, price pressures eased as goods prices fell, the peso appreciated, and external cost inputs softened. By the third quarter, disinflation slowed, prompting the central bank to adopt a cautious stance. Nonetheless, the latest Monetary Policy Report projects CPI convergence to the 3% target by Q1 2026, supported by declining services inflation and anchored expectations. The policy rate, now at 4.5%, reflects a gradual shift from a restrictive stance toward a mildly contractionary posture, aligning with a real neutral rate estimated around 1.25%.

Looking ahead to 2026, Naudon identified three pivotal challenges: potential gains in productivity and trend growth, real‑exchange‑rate movements, and an uncertain geopolitical backdrop. While higher investment could lift potential output, the durability of productivity gains remains unclear. Currency appreciation, partly driven by stronger fundamentals, may influence inflation transmission and monetary policy calibration. Moreover, global risks—from trade tensions to fiscal strains in advanced economies—could quickly alter sentiment. Investors and policymakers will need to monitor these variables closely to sustain Chile’s macro‑economic stability and capitalize on its emerging growth trajectory.