The external demand for critical minerals for electrification and the global energy transition will continue to boost international investment in Chile.

GDP growth for 2024 is estimated at 2.3%, according to third-quarter data. This increase is mainly due to the strength of exports. The economic growth outlook for 2025 is similar, largely driven by domestic demand and a surge in investment.

Investment remains crucial for Chile's economy, which recovered steadily throughout 2024 and is expected to grow above 5% in 2025. This is mainly due to monetary policy easing and the impact of large-scale mining projects.

Private consumption should benefit from a more dynamic employment market, boosting  wage growth and lowering credit costs.

The combination of a restrictive monetary policy and fiscal consolidation, along with the correction of macroeconomic imbalances from previous years , caused inflation to fall sharply in 2023.

However, the normalization of electricity rates, after being frozen for four years, caused inflation to rebound in the second half of 2024 – a trend expected to continue in the first half of 2025. The strong dollar is also generating inflationary pressures, especially on imported goods.

All these factors point to inflation reaching 5% in the first quarter of the new year. However, it should then start to decline rapidly to around 3.7% by the end of 2025 putting the Central Bank of Chile on track to reach its target of 3% during the first half of 2026.

Monetary policy has loosened significantly but factors such as the strength of the dollar and uncertainty about the economic policies of the country's largest trading partners, particularly the United States, could lead to caution in rate cuts.

Short-term cost pressures will continue to drive inflation, albeit temporarily during the first half of 2025. However, the expected growth in private consumption should not put pressure on prices as it has not yet recovered to pre-pandemic trends.

Excluding external shocks, it is projected that the Central Bank of Chile will continue to gradually reduce interest rates, reaching what we estimate to be their neutral rate of 4.25% by the end of 2025.