Chile's Activity Perks Up in September, But Headwinds Still Loom

The print and what drove it

Chile's Imacec, a stand-in for GDP, posted its first monthly increase since June, rising 1.9% in September. On a yearly basis, activity edged up 0.2%, better than the -0.1% call embedded in a Bloomberg estimate.

Mining did the heavy lifting, rebounding 9.8% in September after back-to-back slumps topping 10%. The broader economy also improved: non-mining output advanced 0.9%, helped by a 2.5% rise in commerce and a 0.9% gain in services.

Why caution still hangs over the outlook

"Chilean activity is recovering as disruptions from the July floods and other supply shocks dissipate, with the key mining sector a notable exception. The September data ease growth concerns, with a robust pipeline of investment projects signaling a stronger expansion into next year," said Felipe Hernandez of Bloomberg Economics.

Yet the near-term picture is mixed. Finance Minister Jorge Quiroz said on Oct. 28 that Chile will have to "live with" negative readings on activity over the next few months, citing pricier global energy, harsh weather and soft copper output. He added that non-mining areas such as commerce and services should perform better.

Market recoveries remind investors that updating their tools can preserve a long term edge. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

Policy moves and price pressures

Last week, the central bank held the policy rate at 4.5% and warned that both the balance of inflation risks and consumer-price projections have moved higher, despite data indicating consumption and investment are still subdued. As a result, market chatter has increased about the possibility of rate hikes in the coming months.

Fuel costs are adding to the pinch. Late last month, state refiner Enap announced a fifth straight increase, lifting diesel by 6.7% and pushing both 93- and 97-octane gasoline prices up by nearly 3%. Meanwhile, unemployment is at its highest since 2021, confidence is muted, and bad weather has hampered copper output in recent months. Analysts expect the economy to barely grow this year.

What this means for your portfolio

September's bounce takes some pressure off near-term growth worries, but the setup is uneven: a mining rebound alongside soft demand, costlier energy and weather-sensitive output. Policy risk is back on the table too, with the central bank signaling more concern about inflation. On the fiscal side, President José Antonio Kast's push to create 100,000 jobs and the enacted legislation to cut corporate taxes and back large investment projects aim to support activity, but the payoff may take time.

Keeping pace with better analysis and tools helps investors make more confident decisions. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.