Chile’s Economy Slides As Mining Industry Falters

Chile’s economy has continued its downward trend despite aggressive interest rate cuts by the Central Bank, which has slashed rates by over 6% since mid-2023.

The monthly GDP figures for July revealed growth levels comparable to those seen in September 2022, fueling hopes for further rate reductions.

The mining sector, a cornerstone of Chile’s economy and a key source of foreign revenue, has been significantly impacted by persistent labor strikes, resulting in a 2.8% drop in mining activity.

In addition, industrial production fell by 1.6%, and services contracted by 0.2%. While retail sales saw a surprising 3.9% annual rise, the overall industrial and manufacturing sectors continue to struggle.

Adding to the country’s economic woes, severe rains have disrupted agricultural activities across rural areas, further stressing the economy.

Finance Minister Mario Marcel announced that the government would adjust its 2024 growth projection, initially set at 2.6%, following the release of third-quarter GDP data on November 18.

Reflecting on September’s “disappointing” figures, Marcel pointed to ongoing difficulties, including high unemployment, weak credit demand, and tight financial conditions.

In recent years, investor confidence in Chile has also waned due to lengthy constitutional and tax reform debates, as well as bureaucratic hurdles such as permit delays and regulatory requirements that have deterred investment.