NextFin News - Chile’s economic recovery showed signs of fatigue at the start of the second quarter, as monthly growth slowed to a crawl despite a favorable year-on-year comparison. According to data released by the central bank on Monday, the Imacec index—a reliable proxy for gross domestic product—rose just 0.1% in April from the previous month, falling short of the momentum seen in late 2025.
The reading highlights the fragile nature of the rebound in South America’s most stable economy. While the annual figure showed a more robust expansion of 3.5% compared to April 2025, that number was heavily skewed by a low statistical base and a higher number of working days. On a seasonally adjusted basis, the marginal 0.1% monthly uptick suggests that the domestic demand which fueled earlier gains is beginning to plateau under the weight of restrictive monetary policy.
Mining remained a critical pillar for the nation, yet even this sector faced headwinds. Copper production, which accounts for a significant portion of Chile's export revenue, saw volatile output levels as aging mines and operational delays at state giant Codelco continued to hamper the industry's ability to fully capitalize on high global prices. Non-mining activity, including services and commerce, remained largely stagnant, reflecting a cautious consumer base grappling with high borrowing costs.
Felipe Alarcón, an economist at Euroamerica, noted that the data confirms a "soft start" to the quarter. Alarcón, who has historically maintained a pragmatic, data-driven stance on Chilean macroeconomics, suggested that the central bank may need to remain cautious with further interest rate cuts if inflationary pressures do not subside in tandem with the cooling activity. His view is widely shared among local sell-side analysts, though some international institutions remain more optimistic about a second-half acceleration driven by green energy investments.
The central bank, led by Rosanna Costa, now faces a delicate balancing act. While U.S. President Trump’s administration has maintained a focus on trade dynamics that could impact global commodity demand, Chile’s internal policy remains the primary driver of its immediate trajectory. Policymakers have been lowering the benchmark interest rate from its post-pandemic highs, but the pace of future easing is now under scrutiny as the "easy" gains from the initial recovery phase appear to have been exhausted.
Investment remains the missing piece of the puzzle. While the government of Gabriel Boric has touted a 2.4% growth target for 2026, private sector confidence has been slow to return to pre-protest levels. The stagnation in construction and manufacturing sectors in the April report underscores the difficulty of transitioning from a consumption-led recovery to one sustained by capital expenditure. Without a significant pickup in these areas, the economy risks settling into a period of low-trend growth that could complicate fiscal targets and social spending plans.
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