Chile GDP

Economy stagnates in Q2 2026

Q2’s flat reading undershoots market expectations: Chile's GDP stagnated on a seasonally adjusted quarter-on-quarter basis in Q2, improving slightly from a 0.3% contraction in the previous quarter but falling short of market expectations. On a year-on-year basis, the economy shrank 0.2% in Q2, following a 0.3% contraction in the previous quarter.

Domestic demand weighs on economy: Relative to the previous period's data, figures in Q2 improved for fixed investment (-0.3% on a seasonally adjusted quarter-on-quarter basis vs -4.2% in Q1), exports of goods and services (-0.6% vs -4.2% in Q1) and imports of goods and services (-0.3% vs -2.0% in Q1). In contrast, readings softened for private consumption (-0.5% vs +0.9% in Q1) and government consumption (-3.8% vs +7.0% in Q1). Q2’s still-weak performance reflected a sharp weakening in domestic demand, and net exports remained a drag. Construction continued to weigh on investment, despite stronger machinery spending and rising inventories. The weakness was likely also compounded by three facts: The unemployment rate was at its highest since 2021 in Q2; fishing has faced sector-specific troubles; and the government’s decision earlier this year to let fuel prices jump by the most in over four decades, which has pushed inflation above the 3.0% target and hurt consumer sentiment.

GDP growth set to accelerate but risks loom: Looking ahead, sequential GDP growth is set to pick up from Q2 in Q3, supported by the passing of President José Antonio Kast’s pro-business economic reform plan, which should boost investor sentiment and temper unemployment. Copper shipments should also aid exports amid strong EV and tech demand. Still, the implementation of the plan could be delayed, while inflation will likely remain above target, unemployment is set to be elevated and interest rates are forecast to remain on hold through quarter-end, likely capping private spending.

Panelist insight: On the 2026 outlook, Goldman Sachs’ Sergio Armella commented: “Overall, the economy displayed a weak performance in the second quarter, and sequential growth has averaged -0.1 qoq sa over the last four quarters. Following the second quarter's data release, we have lowered our 2026 growth forecast […]. The risks to our forecast are on the downside, as we assume a rebound in the second half of the year. In contrast to the first quarter, when the composition of the national accounts implied a less dovish read-through, domestic demand was weak in the second quarter, revealing, in our assessment, that the supply shocks that hit the economy early in the year have now broadened to consumption and investment.”

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