Chile poised for 3% growth in 2027 on reform, copper
Bank of America expects Chile's economy to accelerate to 3% growth in 2027, as a corporate tax overhaul and elevated copper prices unlock an investment cycle following a sluggish 2026.
Bank of America projects Chile’s GDP will expand just 1.4% this year before jumping to 3% in 2027. Economists led by Sebastián Rondeau attribute the expected rebound to President José Antonio Kast’s National Reconstruction Plan, a legislative package fast-tracked through Congress since mid-April.
The core of the growth thesis rests on a "mega" pro-growth bill designed to re-anchor medium-term expansion near 4%. The legislation slashes the corporate income tax to 22% by 2029 at a manageable fiscal cost, bundling regulatory streamlining with investment incentives to boost formal employment.
This 3% projection sits at the upper end of the consensus but remains within the Central Bank of Chile’s 2.0–3.0% range for 2027. It aligns closely with Allianz Trade and the International Monetary Fund’s upside scenario, which assumes copper holds between $5.5 and $6.0 per pound. However, BofA’s 1.4% estimate for 2026 is notably below the IMF’s 2.2% and the World Bank’s 2.6%, pointing to a near-term soft patch as political execution takes precedence.
Monetary and fiscal dynamics
Chile’s central bank has already delivered aggressive easing, cutting rates from 11.25% in late 2022 to 4.50% as inflation fell to 2.4% in February. BofA expects this disinflation process to pause for the rest of 2026, followed by two 25-basis-point hikes in 2027 as domestic demand recovers.
For fixed-income investors, this trajectory provides a real-rate cushion and supports the peso. With many developed-market central banks cutting rates, Chilean peso-denominated sovereign debt is positioned as an attractive carry trade.
Commodity leverage
More than half of the additional growth impulse in the IMF’s upside scenario comes directly from elevated copper prices, fueled by energy transition demand. J.P. Morgan notes that US tariffs largely exempt Chilean copper exports, granting the country a competitive edge over mining peers facing trade friction.
Lithium policy presents a residual risk. BofA warns that unresolved questions regarding mining royalties and the role of state-owned enterprises could deter foreign capital. The bullish forecast assumes an investor-friendly resolution that allows Chile to compete with Argentina and Bolivia for battery supply chain investment.
Early indicators suggest private capital is already positioning for the rebound. Scotiabank data shows GDP running at 3.6% year-on-year in early 2026, while capital goods imports surged 25%. Concurrently, Allianz Trade expects the fiscal deficit to narrow to 1.0% of GDP this year, with public debt stabilizing near 40%, preserving sovereign credit strength.
The immediate test for this thesis is Congress. Any significant dilution of the corporate tax cuts would threaten the 2027 trajectory, while copper prices falling below $5.00 per pound would erode the fiscal base underpinning the reconstruction drive.
