OECD Economic Outlook, Volume 2025 Issue 2

Chile

GDP growth is projected to be 2.4% in 2025, and 2.2% in 2026 and 2027. Consumption growth will moderate but remain supported by rising real incomes and employment. Investment is expected to ease but remain robust. Net exports are set to contribute positively to growth over 2026-27. Headline inflation continues to fall and is expected to get close to 3% by the end of 2026 and stabilise thereafter.

Sustaining fiscal consolidation is essential to keep public debt below the debt ceiling. Despite recent efforts to comply with the fiscal rule, Chile needs to strengthen revenues and further improve the efficiency of public spending, including by implementing spending reviews, limiting the growth of current spending and broadening the tax base. The recently approved reform to speed up investment permits and improve regulatory predictability will support investment. The successful adoption of digital government tools can also help reduce business costs, crowd in private investment, and lift productivity.

A strong growth momentum

Real GDP grew 1.6% in the third quarter of 2025, supported by domestic demand, which expanded 5.8% year-on-year. Investment was driven by the machinery and equipment component, while private consumption benefited from strong real wage growth. Consumer and business confidence remain relatively high, and financing conditions have eased recently. Headline inflation fell to 3.4% in October, getting closer to the central bank’s 3% target.

Chile

1. Consumer Price Index excluding energy and food.

Source: Central Bank of Chile; and INE.

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Chile: Demand, output and prices

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Global financial conditions have eased over the past year, supporting Chile’s external environment. The terms of trade have improved, driven by rising copper prices, which are expected to remain high over 2026-27. At the same time, energy import costs have fallen, further easing pressures. The direct macroeconomic effects of the 10% tariffs imposed by the United States on imports from Chile is expected to be limited. Exports to the United States represent 15% of Chile’s total exports, and there is a tariff exemption on Chile’s primary copper and wood exports to the United States, which represent around 45% of the value of merchandise exports to the United States.

Gradual fiscal consolidation paired with monetary easing

The fiscal stance is set to tighten gradually over 2025-27, in line with the fiscal rule and the government’s medium term fiscal plan. A steady consolidation of around 1% of GDP is assumed over this period through a balanced mix of restrained current spending growth, mainly administrative and non-social expenditures, and higher tax revenues as a result of tax broadening measures and strengthened anti-evasion procedures. With inflation projected to get close to 3% by the end of 2026, a gradual easing of the currently slightly restrictive monetary policy is projected, including three additional rate cuts that will bring the policy rate within its estimated neutral range close to 4% in 2027. This outlook reflects ongoing disinflation and firmly anchored inflation expectations.

Growth holds near potential as disinflation continues

Real GDP growth is projected to be 2.4% in 2025, 2.2% in 2026 and 2027, driven by resilient domestic demand, on the back of easier financial conditions, gradual fiscal consolidation, and a rising real wage bill that supports consumption. A revival in the investment pipeline, particularly in mining, energy and related capital goods, will also support growth. Exports are set to add modestly to growth, with export growth recovering through 2026 and 2027 while import growth will slow sharply. The current account deficit is projected to narrow slightly by 2027. Headline inflation is expected to continue declining, converging towards the 3% target in 2026. On the upside, growth could exceed expectations if investment projects accelerate due to permit reform, copper export volumes normalise, or copper prices rise. Chile’s membership in the Trans-Pacific Partnership free trade area (CPTPP) and relatively low effective US tariffs could support export growth to other markets if US trade tensions rise. Downside risks include weaker‑than‑expected global metals demand, a slower deployment of mining investment projects, tighter global financial conditions that weaken the peso and raise funding costs, and higher energy prices that could weigh on exports and inflation.

Preserving stability via consolidation, and accelerating regulatory reforms

The government has outlined a fiscal consolidation plan for 2025-27. Following the deviation from the structural target in 2024 because of revenue shortfalls, meeting the fiscal rule will require firm implementation of spending restraint and revenue-enhancing measures. Recent pro-investment permitting reforms are expected to streamline procedures, reduce costs, time and uncertainty. Chile’s rapid digital‑government rollout can be leveraged to deliver services faster. Integrating platforms such as the one-stop digital platform into a broader whole-of-government strategy would cut red tape further, lower compliance costs, and crowd in private innovation and investment. Complementary efforts to strengthen workforce skills and align training with emerging industry needs, such as harnessing the potential of AI and adapting industries to climate change, would reinforce productivity and sustain medium‑term growth.