Chile Closes 2025 With a Surprise Growth Beat, but Mining Woes and Fiscal Cracks Cloud the Handover to Kast

Key Points

• Chile’s economy grew 1.7% in December, nearly double market expectations of 0.9%, lifting estimated full-year GDP growth to 2.3% — yet mining output plunged 8.1%, exposing deep structural fragility in the world’s top copper producer.
• The outgoing Boric government halted an 18-year streak of rising public debt, holding it at 41.7% of GDP, but missed its fiscal deficit target for a third straight year, finishing 2025 at 2.8% instead of the projected 2.0%.
• President-elect José Antonio Kast, who won December’s runoff with 58.2% of the vote, inherits stable but slow-growing economy and has pledged US$6 billion in spending cuts — with few specifics on where the axe will fall.

Chile’s economy delivered a parting gift to the outgoing government of Gabriel Boric. The Central Bank reported Monday that the Imacec — a monthly proxy covering roughly 90% of GDP — rose 1.7% year-on-year in December.

Driven by a 6.6% surge in trade and 2.2% growth in services, particularly healthcare. Analysts polled by Bloomberg and Diario Financiero had expected barely 1%.

The result lifts estimated 2025 GDP growth to 2.3%, according to Finance Minister Nicolás Grau, with the official figure due March 18.

Strip out mining, and the picture is more flattering still: the non-mining Imacec expanded 3.0%, fueled by vehicle sales, online retail, food wholesaling, and agro-forestry output.

But copper — Chile’s lifeblood, accounting for 59% of exports worth US$63.3 billion in 2025 — told a grimmer story.

Mining fell 8.1% in December, capping a year scarred by the July 31 collapse at Codelco’s El Teniente mine that killed six workers, shut four production sectors, and slashed output by an estimated 33,000 to 48,000 tonnes.

Chile Economic Growth Faces Mixed Signals

Nationally, copper mine production slipped 1.3% through November to 4.87 million tonnes even as prices hit records above US$5.12 per pound, propelled by electric-vehicle and AI-infrastructure demand.

The fiscal ledger was equally mixed. Grau announced that public debt held steady at 41.7% of GDP — the first year without an increase since 2007.

Yet the deficit reached 2.8% of GDP, overshooting the 2.0% target after non-mining corporate tax receipts from the country’s eleven largest firms collapsed 31.7% in the final months.

The government disclosed an US$800 million spending cut and created an expert commission to investigate the revenue shortfall. The numbers land squarely in the crossfire of Chile’s sharpest political transition in years.

Boric’s camp cast the data as validation: inflation tamed from a 14.1% peak to 3.4%, debt stabilized, real wages rising. Grau declared he would deliver Kast “a normalized economy in conditions to keep growing.”

The right disagreed. Libertad y Desarrollo, a leading conservative think tank, noted November’s Imacec had disappointed at just 1.2%, and that Chile has now grown below the world average for three consecutive years.

Senator Ximena Rincón warned the country “is not normalized” given 8.4% unemployment and persistent informality at 26.2%. Abroad, the OECD projects 2.2% growth for 2026, while flagging headwinds from U.S. trade policy.

A 50% American tariff on semi-finished copper products took effect in August, though refined cathodes — the bulk of Chilean shipments — remain exempt.

The bigger worry is indirect: a prolonged U.S.-China trade war depressing global demand for the metal Chile depends on more than any other nation.

Kast, who takes office March 11, has promised to make economic growth, security, and immigration his top priorities.

His incoming finance minister, Jorge Quiroz, has already tempered expectations, suggesting the pledged US$6 billion in cuts may require more time than the 18 months originally advertised.

With no congressional majority, Kast will need to build coalitions in a fragmented parliament — a challenge that eluded his predecessor on virtually every major reform.

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Related coverage: Brazil’s Morning Call | The Paradox of Chile’s UN Bid: Only Bachelet’s Political Riv This is part of The Rio Times’ daily coverage of Chile affairs and Latin American financial news.

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