Chile’s Latest GDP QoQ Decline: A Data-Driven Macro Analysis
Table of Contents
Chile’s latest Gross Domestic Product (GDP) figure for Q3 2025, released on November 18, shows a contraction of 0.10% quarter-on-quarter (QoQ), according to the Sigmanomics database. This marks a sharp reversal from the 0.40% growth recorded in Q2 and the 0.70% peak in Q2 2025. The data covers the entire Chilean economy and reflects real GDP changes adjusted for seasonal effects.
Drivers this month
- Mining sector output declined amid lower copper prices, subtracting approximately 0.15 percentage points from GDP.
- Manufacturing and construction slowed, contributing a combined -0.05 pp.
- Services remained stable but showed no growth momentum.
- Domestic consumption weakened due to tighter credit conditions.
Policy pulse
The Central Bank of Chile’s recent interest rate hikes, aimed at curbing inflation, have tightened financial conditions. The policy rate now stands at 11.25%, up from 10.75% three months ago. This contractionary stance is consistent with the GDP slowdown, as borrowing costs rise and dampen investment and consumption.
Market lens
Immediate reaction: The Chilean peso (CLP) depreciated 0.30% against the USD within the first hour post-release, reflecting concerns over growth prospects. Sovereign bond yields edged up by 5 basis points, signaling slightly higher risk premia.
Chile’s GDP contraction contrasts with the broader Latin American region, where average growth remains positive at around 0.20% QoQ. Inflation remains elevated at 6.80% YoY, well above the Central Bank’s 3% target, complicating the policy outlook. Unemployment holds steady at 7.10%, but underemployment and informal sector activity suggest labor market slack.
Monetary Policy & Financial Conditions
The Central Bank’s hawkish stance, with four consecutive rate hikes since mid-2025, has increased borrowing costs. Credit growth slowed to 2.30% YoY, down from 4.10% six months ago. The tighter monetary environment is a key factor behind the GDP contraction.
Fiscal Policy & Government Budget
Chile’s fiscal deficit widened to 2.80% of GDP in Q3, driven by increased social spending and subdued tax revenues. The government announced a moderate fiscal consolidation plan aiming to reduce the deficit below 2% by 2026, which may restrain public investment in the near term.
External Shocks & Geopolitical Risks
Global copper prices fell 8% QoQ, pressuring Chile’s export revenues. Additionally, geopolitical tensions in Asia have disrupted trade flows, affecting manufacturing exports. These external shocks compound domestic challenges and weigh on growth.
The chart below illustrates the quarterly GDP growth trend over the past year, highlighting the recent downturn after a sustained expansion phase. The volatility in commodity prices and tightening financial conditions are clearly reflected in the data.
This chart underscores a clear reversal in Chile’s growth trajectory, trending downward after four quarters of positive momentum. The mining sector’s slump and tighter credit conditions are key contributors, suggesting caution for near-term economic prospects.
Market lens
Immediate reaction: The CLP/USD exchange rate weakened by 0.30% post-release, while the 2-year government bond yield rose by 5 basis points, indicating increased risk aversion among investors.
Looking ahead, Chile’s GDP trajectory faces multiple scenarios shaped by domestic and external factors. The baseline forecast projects modest growth of 0.20% QoQ in Q4 2025, assuming stabilization in commodity prices and no further monetary tightening.
Bullish scenario (20% probability)
- Copper prices rebound by 10% in Q4, boosting mining output.
- Monetary policy pauses, easing credit conditions.
- Fiscal stimulus accelerates infrastructure spending.
- GDP growth rebounds to 0.50% QoQ.
Base scenario (55% probability)
- Commodity prices remain stable but subdued.
- Monetary policy remains restrictive but steady.
- Fiscal consolidation limits public spending growth.
- GDP growth modestly recovers to 0.20% QoQ.
Bearish scenario (25% probability)
- Further copper price declines of 5-7%.
- Additional rate hikes to combat inflation.
- Geopolitical tensions worsen trade disruptions.
- GDP contracts further by 0.30% QoQ.
Policy pulse
The Central Bank’s next meeting in December will be critical. Any indication of further tightening could deepen the slowdown. Conversely, signs of inflation easing may prompt a pause, supporting growth.
Chile’s Q3 GDP contraction signals a pause in the post-pandemic recovery, driven by external shocks and tighter domestic policies. The interplay between commodity prices, monetary policy, and fiscal discipline will shape the medium-term outlook. Structural reforms to diversify the economy and improve productivity remain essential to sustain growth beyond cyclical fluctuations.
Financial markets & sentiment
Investor sentiment remains cautious. The Chilean peso’s depreciation and rising bond yields reflect concerns over growth and fiscal sustainability. However, equity markets have shown resilience, pricing in a gradual recovery scenario.
Structural & long-run trends
Chile’s reliance on copper exports exposes it to commodity cycles. Efforts to expand renewable energy, technology, and services sectors are underway but will take time to offset cyclical shocks. Demographic shifts and labor market reforms will also influence long-term growth potential.
Key Markets Likely to React to Gross Domestic Product QoQ
Chile’s GDP data typically influences a range of financial markets, from currency pairs to equities and bonds. The following symbols historically track Chile’s economic performance and are likely to react to GDP releases:
- USDCOP – The USD/Colombian Peso pair often moves in tandem with regional economic shifts, reflecting investor risk appetite in Latin America.
- BSAC – Banco Santander Chile’s stock price is sensitive to domestic economic conditions and credit growth.
- CLPUSD – The Chilean Peso against the US Dollar is a direct barometer of economic sentiment and capital flows.
- BTCUSD – Bitcoin’s price often reflects global risk sentiment, which can be influenced by emerging market growth data.
- ENELCH – Enel Chile’s stock is linked to infrastructure investment and energy demand, both tied to GDP trends.
FAQs
- What does Chile’s latest GDP QoQ figure indicate?
- Chile’s GDP contracted by 0.10% in Q3 2025, signaling a slowdown after four quarters of growth and reflecting tighter monetary policy and external shocks.
- How does this GDP reading affect Chile’s monetary policy?
- The contraction supports the Central Bank’s cautious approach but raises risks of over-tightening, which could further slow growth.
- What are the main risks to Chile’s economic outlook?
- Key risks include commodity price volatility, geopolitical tensions disrupting trade, and potential fiscal tightening amid a widening deficit.
Final takeaway: Chile’s Q3 GDP contraction highlights the delicate balance between inflation control and growth support. Policymakers must navigate external shocks and structural challenges to sustain recovery momentum.
USDCOP – Regional currency pair sensitive to Latin American economic shifts.
BSAC – Chilean bank stock reflecting domestic credit and economic health.
CLPUSD – Chilean Peso vs. USD, a direct gauge of economic sentiment.
BTCUSD – Bitcoin price, a proxy for global risk appetite.
ENELCH – Energy sector stock linked to infrastructure and GDP trends.
Chile’s GDP growth rate of -0.10% in Q3 2025 contrasts with the 0.40% expansion in Q2 and the 12-month average growth rate of 0.35%. This negative print is the first contraction since Q1 2024, signaling a potential inflection point in the economic cycle.
The mining sector’s output decline of 1.20% QoQ was the largest drag, reversing a 0.50% gain in the previous quarter. Manufacturing growth slowed to 0.10% from 0.60%, while services remained flat.