Chile’s Economy Likely Grew in June, but Forecasts Keep Falling
Markets
Key Facts
—The forecast. Analysts polled in the central bank’s 10 July survey expect June activity to have risen 1.2%, ending five straight months of annual contraction.
—The catch. The figure is a projection, not a result; the actual June Imacec is published in early August.
—The downgrade. The same survey trimmed 2026 growth to 1.3%, and analysts now see no interest-rate cut this year, with the rate held at 4.5%.
—The slump. Activity contracted in the first quarter and fell in February, with a 0.9% drop in May driven by an 11.6% collapse in mining output.
—The stake. Unemployment reached 9.4% in the March-to-May quarter, its highest in about five years.
The Chile economy probably started growing again in June, according to the market, which is welcome news wrapped inside a gloomier forecast.
The central bank published its monthly survey of analysts on Friday. In it, economists expect the June activity index to show growth of about one and a fifth percent, which would end five consecutive months of decline.
It is worth being precise about what that number is. It is a forecast, not a measurement, and the real June figure will not arrive until the first business day of August.
Why the Chile economy has struggled all year
The story of 2026 so far is a story about copper, but it is also the latest chapter in a longer pattern of deceleration our reporting has tracked—from the record 20.1% pandemic rebound in June 2021, through the cooling to 3.7% growth by June 2022, to the back-to-back monthly contractions we documented in 2024. The monthly activity index, known locally as the Imacec, fell in January, February, March, April and May.
May’s decline of nearly one percent was driven almost entirely by mining, where output dropped more than eleven percent against a year earlier. Strip mining out, and the rest of the economy actually edged higher.
That divergence has been the pattern all year. Ageing copper deposits, operational problems and a slow permitting regime have held the sector back, while services and commerce quietly kept growing.
The numbers make the split plain. In May, goods production fell nearly five percent while services and trade both rose, so the economy’s troubles were concentrated in what comes out of the ground.
The human cost sits in the labour market. Unemployment climbed to nine and two fifths percent in the latest quarter, the highest reading since the pandemic years.
Does a growing June mean the Chile economy avoided recession?
Not necessarily, and this is the subtlety the headline number hides. Ending the run of monthly declines is one thing; avoiding a technical recession is a separate, higher bar.
One university economist noted that June would need annual growth above two and a fifth percent to rule out a technical recession under one common definition. The market’s forecast of about one and a fifth percent sits below that line.
Others measure it differently. Our earlier reporting cited the former central bank president Vittorio Corbo, who put the odds of a technical recession at no more than about thirty percent, hinging on whether June activity fell in seasonally adjusted terms.
The two views are not contradictory. A month can grow against the prior year while a quarter still shrinks, which is exactly why economists are watching this single figure so closely.
The forecast that fell even as activity rose
Here is the twist. In the same survey that expects June to turn positive, analysts cut their full-year growth estimate for 2026 to one and three tenths percent.
They also pushed back the timing of relief. The market now expects the central bank to hold its benchmark rate at four and a half percent for the rest of the year, rather than cutting it.
The finance minister, Nicolás Grau, has struck a more upbeat note, telling reporters that June very probably grew and that the months ahead should follow. On this, at least, the government and the market agree.
Where they part company is on staying power. The government frames June as the start of a recovery; the analysts treat it as the end of a decline, which is not the same thing.
The rate call captures the difference. If the central bank saw a genuine rebound coming, it would be discussing cuts, not signalling a hold until next year.
Frequently Asked Questions
What growth do analysts expect for June?
The central bank’s 10 July survey expects June activity to have risen 1.2%. That would end five straight months of annual contraction.
Is that 1.2% figure an official result?
No, it is a forecast rather than a measurement. The actual June Imacec is published on the first business day of August.
Why did the Chile economy struggle all year?
Activity fell every month from January to May, largely because of mining. In May, output dropped more than eleven percent against a year earlier, while services and trade kept growing.
Will the central bank cut interest rates this year?
Analysts now see no cut this year. The market expects the benchmark rate held at 4.5% for the rest of 2026.
What should a foreign investor take from this?
That Chile is bottoming out rather than rebounding. A growth year near one and a third percent, with no rate cuts, describes an economy crawling forward rather than accelerating. The swing factor remains copper, and until mining recovers the headline numbers will keep understating the rest of the economy.
Connected Coverage
Chile Recession Risk Near 30%, Ex-Central Bank Chief Says
Chile’s Economy Falls a Fourth Month as Mining Slumps
Chile’s Economy Shrinks in Q1, Threatening Kast’s Growth Plan
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
In depth
Read More from The Rio Times