Chile

Growth momentum set to lose some steam

Economic growth will decelerate marginally in 2026. Household consumption (accounting for 58% of GDP in 2024) should expand at a slower pace, although it will remain the main contributor to growth. The trend is supported by the continuation of the gradual disinflationary process, combined with the easing of monetary policy (the policy rate has converged towards neutral), declining unemployment rate and rising real wages. Similarly, the increase in public spending (15% of GDP) is also likely to lose some steam on back of the new government’s focus on fiscal consolidation. Conversely, gross fixed investment (24% of GDP) should accelerate over the same period amid relatively better financing conditions (on the domestic and external fronts) and higher copper prices. According to the Capital Goods Corporation survey for Q3 2025, the five-year nominal investment forecast is estimated at USD 79 billion—roughly 24% of 2024 GDP—with 79% coming from the private sector and 21% from the public sector, primarily in mining, energy and public works.

A planned joint venture between Chilean state copper giant Codelco and local producer SQM to develop lithium received final approval from China’s antitrust regulator in November 2025, clearing the way for operations in the Atacama salt flat. The deal, which was announced nearly two years ago, is part of a government strategy to expand state involvement and boost output. Importantly, President-elect José Antonio Kast, in contrast with the outgoing government, endorses greater private-sector participation, supporting amending the Mining Code to allow reversing the current state-centric approach.

Concerning exports (30% of GDP), despite the favourable terms of trade, Chile should post somewhat lower export growth in 2026 as demand from its main trading partner, China – the destination of about 39% of foreign sales – should continue to gradually lose steam. Last, while the La Niña weather phenomenon is expected to hit in early 2026, it should not be very intense and only last for a short time. In Chile, La Niña typically brings cooler temperatures and less rainfall, often causing drought. It cools Pacific waters along the coast, intensifying upwelling and boosting nutrients, which increases plankton and favours species like anchoveta and sardine, which supports industrial fishing. However, warmer-water species may migrate, thereby hurting artisanal fishing. Prolonged drought remains a concern for agriculture (3% of GDP) and mining (12% of GDP).

Twin deficits to narrow somewhat

The current account shortfall is expected to narrow in 2026. The trade balance surplus (6.1% of GDP in 2024) should widen, reflecting relatively faster growth of exports than imports. While external purchases will continue to be supported by robust imports of capital goods (on back of a strong investment pipeline), the slowdown in growth will be underpinned by a high comparison base and durably weak energy prices, thereby contributing to a slightly lower energy trade deficit. Similarly, the services deficit could narrow slightly compared to 2025 (2.8% of GDP), helped by lower maritime and air transport costs. In contrast, the primary income deficit (5.1% of GDP) could rise marginally as a result of durably upbeat profit repatriation owing to high copper prices. Foreign direct investment (3.8% of GDP) should fully cover the current account deficit. Importantly, Chile's negative net international investment position stood at -19% of GDP in Q2 2025, softened mainly by the existence of significant pension fund investments abroad (31% of GDP in June 2025). External debt stood at 75% of GDP in Q2 2025, 65% of which is owed by the private sector.

On the fiscal front, the nominal deficit (including interest payments) is expected to decrease slightly in 2026. The budget bill for 2026 is forecasting a 1.7% increase in real expenditure in annual terms, while revenues are expected to increase by 7.7% over the same period. In the latter case, policymakers will rely on expected moderate economic growth and an increase in revenues from mining royalties, especially copper and lithium, thanks to new contracts and higher production. Last, the gross public debt ratio should remain moderate in 2026. The internal portion (70% of the total, derived solely from the central government) is denominated in pesos or UF (a development unit, with a peso indexed to inflation), while the external portion is in dollars (83%), euro (10%) and other miscellaneous currencies (7%). Of significant importance, President-elect Kast has proposed a USD 6 billion spending cut within 18 months (equivalent to 1.9% of 2024 GDP) generated as follows: USD 1.8 billion from eliminating misuse of public resources, USD 2.1 billion by improving state efficiency and streamlining bureaucracy, and USD 2.1 billion by imposing general austerity on government expenditures. However, implementing the plan will be a challenge because 85% to 90% of public spending is legally mandated, meaning substantial cuts would require legislative reforms and political agreements (even if Kast seeks at least partial support from Congress). Moreover, implementing spending cuts of this magnitude before 2027 is unlikely as the 2026 budget was passed by the outgoing administration. Last, although Kast has promised not to touch social benefits, it will be hard to avoid making an impact given the scale of the adjustment.

Chile veers to the right

In December 2025, Chile held the presidential election run-off in which conservative candidate José Antonio Kast of the Partido Republicano won 58% of the vote, defeating the incumbent leftist coalition candidate Jeannette Jara, who secured 42%. Kast will begin his four-year term on 11 March 2026. His victory can be attributed to the shift in public mood from inequality and pensions during the last two electoral cycles towards crime and violence. His campaign took a much tougher stance on security and undocumented migration than Jara’s, and advocated measures such as physically and technologically sealing illegal crossings, building border walls, the mass deportation of undocumented migrants (at their own expense), constructing new high-security prisons, and imposing harsher sentences on gang members and criminals. While Chile remains one of Latin America’s safest countries, crime has surged in recent years. The homicide rate has more than doubled—from 2.32 per 100,000 in 2015 to 6.0 in 2024—and kidnappings hit a record 868 cases in 2024, with the State Attorney’s office linking 40% to organised crime. This spike coincided with a wave of undocumented Venezuelan migration, which grew from 1,200 in 2018 to 252,600 thousand in 2023. The backlash against immigration has increasingly merged with the crime debate. Significant increases in both migration and crime after the pandemic created dual shocks for a country unaccustomed to either. Chile’s northern desert borders with Peru and Bolivia have become a big flashpoint. Its porous borders and major duty-free port of Iquique were largely off the radar of international criminal organisations until large scale immigration drew their attention.

Regarding economic policy, Kast supports deregulation, lower business taxes (proposed corporate tax reductions to 20% from the current 27% and 23% imposed on large and medium firms), encouraging private technological innovation (including partnerships with global tech firms), and measures to boost mining which include reducing royalties and streamlining permit procedures to reduce delays and attract foreign capital. He also endorses the easing of labour restrictions by making hiring and firing more flexible and limiting union power. In Congress, the shift to the right was less pronounced than in the presidential race. All 155 seats in the Lower House and 23 of the 50 Senate seats were contested on the same day as the first-round of the presidential election in November 2025. As none of the declared coalitions holds an outright majority in either house, governance will require negotiation across the political spectrum. The right-wing and centre-right bloc increased its representation in the lower house from 73 to 76 seats, short of a majority. However, if the centrist Partido de la Gente (PDG) aligns with them in the house, the block could surpass the four-sevenths supermajority threshold, enabling constitutional amendments. Meanwhile, the outgoing coalition’s number fell from 74 to 61 seats, and the Greens held 3 seats. In the Senate, the right-wing coalition will control 25 seats, while the outgoing coalition will have 20—potentially reaching 25 with support from the Green Party and left-wing independents. This means 25–25 ties may become frequent in the new legislature. Chile’s Senate has no tie-breaking vote; if it rejects a bill approved by the Chamber of Deputies, a Joint Committee may be convened to resolve the disagreement; otherwise, the bill will be dismissed.

Kast is expected to be pragmatic in foreign policy. While ideologically closer to right-wing leaders such as US President Donald Trump and Argentina’s Javier Milei, he is likely to maintain cordial ties with China given Chile’s heavy reliance on Chinese demand—particularly for copper. With the US, cooperation is expected to deepen on regional drug-related crime and security. As for Argentina, Kast made his first foreign visit as President-elect to the neighbouring country in December 2025, where he endorsed a joint agenda with Javier Milei focused on promoting trade and investment, highlighting collaboration in key sectors such as mining, infrastructure and technology. Overall, Kast supports continuity in Chile’s international integration, seeking to expand access to global markets. He also favours reducing operational friction and transaction costs, and improving logistics and infrastructure to enhance export performance. Regarding Venezuela, Kast has openly supported any US intervention aimed at ending what he calls a “narco-dictatorship.” He stated that Chile would back such efforts, arguing they would benefit not only Venezuela but the entire Latin American region. He also proposed creating a humanitarian corridor to facilitate the organised return of Venezuelan migrants as part of his broader regional cooperation strategy. As for Colombia, Kast has made fewer direct comments, but his election sparked strong criticism from Colombian President Gustavo Petro.

Payment

Promissory notes, cheques and bills of exchange are frequently used for commercial transactions in Chile. In an event of default, it offers creditors some safeguards, including access to the summary proceeding (Juicio Ejecutivo). Under a juicio ejecutivo, based on his appraisal of the documents submitted, a first instance judge (Juzgado Civil) may order a debtor to pay at the moment of the notification – if the debtor fails to do so, his property will be seized. These documents may need to be validated by court before becoming legally enforceable.

Bills of exchange that are guaranteed by a bank are widely accepted, though somewhat difficult to obtain. They limit the risk of payment default by offering creditor additional recourse to the endorser of the bill.

Cheques, which are used more often than bills of exchange or promissory notes, offer similar legal safeguards under Juicio Ejecutivo in the event of unpaid for a cause (protesto), uncovered cheques, or closed accounts. Checks and the other mentioned documents, if not paid on time, can be reported to a Credit Report Company called Boletin Comercial.

The same is true of the promissory note (pagaré), which ? like bills of exchange and cheques – is an instrument enforceable by law and, when unpaid, may also be recorded at Boletín Comercial (see below). The promissory note needs to be validated (protestada) by a public notary or in a judicial trial.

The Boletín Comercial is a company dedicated to conducting financial risk analysis. It provides to other information companies (such as Dicom, SIISA) information about the debts registered at national level for all kind of debtors. Boletín Comercial is the official and most important company, on this matter, at national level under the authority of the Santiago Chamber of Commerce (Cámara de Comercio de Santiago). Both, Companies and individuals, can be registered as debtors in the Boletin Comercial. The register provides key financial information that can be consulted by anyone who is interested in obtaining a picture of the financial behaviour of a Company or individual.

Electronic transfers via the SWIFT network, widely used by Chilean banks, are a quick, fairly reliable, and cheap instrument.

Debt Collection

Amicable phase

Collection begins with an amicable collection process where parties can agree on a payment settlement or other payment plan. The length of this amicable phase depends on the predefined term of the documents supporting the debt (cheque, invoice, promissory note, bill of exchange). A formal notice is sent by a recorded delivery letter inviting the debtor to pay.

If the parties did not include any specific clauses in the commercial contract, the applicable rate for delays on the payment is the conventional interest rate as defined by the central bank of Chile on a periodical basis.

ORDINARY PROCEEDINGS

When a settlement agreement cannot be reached with the debtor, the creditor will initiate a legal collection process ruled by local civil procedure.

Aside from the Juicio Ejecutivo creditors who are unable to settle with their debtors out of court may enforce their right to payment through the corresponding legal action ruled by the civil procedure. According to the local procedural laws, there are two kinds of judicial collection procedures; i), ordinary proceedings (Juicio Ordinario); ii) and abbreviated proceeding (Juicio Sumario) depending on the value of the sued amount and the type of documents that support the debt.

The claimant needs to explain the basis for their legal action and enclose all supporting documents (original copies) and evidence. After the first presentation in court, the judge will decide whether the legal action has basis or not. If the judge considers there are enough arguments and evidence, he will give course to the process.

All judicial action needs the presence of a barrister or solicitor (lawyer), whether taking place in front of a minor court (Juzgados – primera instancia) or superior court (Corte Apelaciones o Suprema ? segunda instancia).

Debtors can dispute ruling with motivated arguments that law contains at the Código de Procedimiento Civil (Civil Procedure Code, defences) such as payment of debt, prescription, compensation, etc. Judges will consider these arguments and will accept or reject the defence. It is important to note that, while the defences of the debtor are discussed by the parties in the trial, the steps relating to seizure of assets are not stayed. The idea of this is that the debtor cannot delay the procedure unnecessarily.

Trials can last from six months up to two years, depending on the document, the debtor’s defence, and if an appeal is filed following the initial judgement.

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Enforcement of a Legal Decision

Domestic judgments are enforceable when all appeals have been exhausted. If the debtor fails to comply with the decision, the court can order an auction of the debtor’s assets. Collection from a third party owing to the debtor is not possible.

Foreign judgments may be enforced if the Supreme Court validates these through an exequatur proceeding. Chilean law only recognises foreign judgements on a reciprocity basis: the issuing country must have an agreement with Chile regarding recognition and enforcement of legal decisions. Proceedings can last from between one to two years and the amounts to recover decrease because it is not possible to request the restitution of taxes paid to the treasury, which national companies can require.

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Insolvency Proceedings

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OUT-OF COURT PROCEEDINGS

Extra-judicial reorganization

The 2014 bankruptcy law recognizes agreements between creditors and debtors that are reached outside of a bankruptcy proceeding, whereby a court approves the agreement that was developed outside of the bankruptcy court. In order to be approved, two or more creditors whose claims represent at least 75% of the total claims corresponding to their respective group must accept the plan.

Chilean law distinguishes different categories of creditors during a bankruptcy process, e.g. employees owned money, creditors that have a mortgage (usually banks), etc. Creditors in these categories have preference for payment over others. If creditors do not meet the criteria to be part of these categories, they do not receive have any kind of preference for payment.

While considering the approval of said plan, the court stays the procedure and the legal actions against the debtor. However, during this time also, the debtor is prohibited from disposing of any of its assets. After approval, the plan has the same effect as a judicial reorganization.

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Restructuring proceedings

Restructuring processes carried out without a formal bankruptcy process are also carried out through a court trial at the request of the creditor(s). In the event that the debtor is not able to reorganize his debt through any agreement or negotiation, creditors may request the liquidation of the company.

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JUDICIAL REORGANIZATION

These agreements are more formal than extra-judicial agreements, and can only be filed by debtors, as they have to declare their insolvency to the court. The proceedings apply to both secured and unsecured creditors. Once debtors enter the judicial reorganization process, they must subsequently propose a reorganization plan, which requires the approval of at least two thirds of the total number of creditors.

LIQUIDATION

Liquidation is organized through a single procedure initiated upon demand of the debtor or creditors. The latter can file for bankruptcy when a debtor defaults without appointing an administrator for its business. Once bankruptcy is declared, a trustee is given responsibility for the debtors’ business and assets.

Last updated: December 2025