Chile: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Chile

The 2026 Article IV Consultation discusses that Chile’s economy remains resilient, with its outlook supported by higher copper prices, though the rise in oil prices has pushed inflation temporarily above target. The new administration aims to raise potential growth through deregulation and tax reforms, while consolidating the fiscal position via expenditure cuts. While the economy remains resilient, fiscal buffers have shrunk and structural challenges persist. Growth is projected to moderate to 1.8 percent in 2026, as higher oil prices and tighter financial conditions following the war in the Middle East weigh on activity, partly offset by support from elevated copper prices. Risks are to the downside in the near term and broadly balanced over the medium term. The objective of steadily reducing the structural fiscal deficit to 1.5 percent of GDP by 2030 is welcome but additional measures will be needed, especially if some of the announced spending cuts are not feasible or if downside risks materialize. Broad-based measures to boost growth, including by rationalizing regulations, are critical. Complementary policies to facilitate trade and logistics, narrow skill gaps, and raise female labor supply would enhance productivity and investment.