Rhythmic Reasoning_Full Report_Final_EN - Flipbook - Page 41
RHYTHMIC REASONING | TEMPO, TIMING AND TUNING
CHILE
Juan Manuel Herrera Betancourt
Anibal Antonio Alarcon Astorga
Senior Economist, Investment Strategy
Senior Economist, Chile
2024
2025f
2026f
GDP Growth
3.1%
2.6%
2.5%
2.5%
Inflation
4.0%
4.3%
4.4%
3.2%
Unemployment
8.6%
8.1%
8.4%
7.9%
Budget Bal.
-2.9%
-2.9%
-2.0%
-1.7%
Latest
2024
1-yr fwd
2-yr fwd
2-yr yield
4.7%
5.0%
4.6%
4.9%
10-yr yield
5.6%
6.0%
5.4%
5.6%
Yield curve slope
0.9%
1.0%
0.7%
0.6%
Source: Scotia Wealth Management, Bloomberg Finance LP.
"Latest" values are as at September 30, 2025 and, for data other than bond yields,
pertain to the most recent monthly, quarterly, or annual reading available on
this date. GDP, inflation, and unemployment forecasts are based on Scotiabank
Economics forecasts dated September 11, 2025, budget balance forecasts
are based on median consensus estimate compiled by Bloomberg | 2024
inflation and unemployment are based on the average YoY rates for each
month of the year. | 2024 yields are as at December 31, 2024. Forward periods
are relative to September 30, 2025 and are based on forward market pricing.
KEY CONCLUSIONS
•
•
•
Chile’s economy has exceeded expectations in 2025, buoyed
by an outperformance of investment and consumption. The
former looks set to remain an important driver of growth in
2026 as Chile’s macroeconomic equilibrium driven by the
private and household sector continues, maintaining a ~2.5%
rate of growth this year and next.
Weakness in labour markets over mid-2025 has been the
fly in the ointment of Chile’s economy this year, requiring a
watchful eye for risks that household spending deteriorates
in the months ahead.
November (1st round) and December (2nd round)
presidential elections point to a likelier chance of victory for
a business-friendly administration that could buoy growth.
Polls have narrowed of late, however.
Chile’s economy has exceeded expectations in 2025, buoyed by
an outperformance of investment and consumption. The former
looks set to remain an important driver of growth in 2026 as Chile’s
macroeconomic equilibrium driven by the private and household
sector continues, maintaining a ~2.5% rate of growth this year and
next, although recent mixed employment readings warrant caution
for risks to the GDP picture. The result of the November/December
elections may play an important role in the performance of the
economy next year, with polls currently pointing to greater odds in
favour of a more business-friendly administration—though it’s still
too soon to call.
National accounts for the second quarter and the momentum
observed in early 3Q25 have confirmed the rebound in investment
this year (Fig. 1), driven by demand for machinery and equipment
for mining and construction, as well as the solid performance of
services. The recovery in investment has been clearly reflected in
import trends this year, with data to August showing a year-to-date
(YTD) increase of 25% year-over-year (YoY) in imports of capital
goods—compared to the 11% YoY YTD drop that this category was
tracking this time last year—with a ~100% YoY jump in purchases
of machinery for mining and construction.
Fig. 1: Consumption and investment leading GDP gains in 2025
Contribution to % YoY GDP growth
Latest
10%
5%
0%
-5%
-10%
2023
2024
2025
Private consumption
Investment
Government consumption
Inventories
Net trade
Real GDP growth
Source: BCCh, Scotia Wealth Management.
On the consumption front, household spending registered solid
gains of 2.0% and 3.1% YoY in 1Q and 2Q25, respectively, with
massive gains in durable goods expenditures (averaging 9%
YoY over the past three quarters) propelling growth in personal
consumption. Goods strength aside, where purchases by foreign
visitors (namely Argentinians) played an important role, services
outlays picked up to 2.1% YoY in 2Q, in their best reading since 2019
(pandemic spikes aside).
In this context, we maintain our GDP growth projection at 2.5%
for 2025, with an upward bias, in line with the Chile’s Central
Bank's adjustment at its September Monetary Policy Report, when
it raised its estimate to 2.6%. Investment should be a key driver of
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