Daniel Velandia, economista jefe de Credicorp Capital: “Vamos a bajar nuestra proyección de PIB de 1,7% a 1,1% para el año”

Daniel Velandia, chief economist at Credicorp Capital, announced during a recent analysis that his team will revise its projection for Chile’s Gross Domestic Product (GDP) growth for 2026 downward, from 1.7% to 1.1%. This adjustment comes after a weak performance in the first half of the year, which saw the economy contract by 0.2%. The revised forecast reflects concerns over the sustainability of economic activity beyond statistical factors, such as seasonal variations and base effects. The first-half GDP growth of 2.4% was driven primarily by a strong recovery in the mining sector, which rebounded following the El Teniente incident a year earlier. Additionally, the increase was influenced by the number of working days and statistical adjustments. However, these gains appear to be more reflective of temporary conditions rather than sustained improvement in economic performance. Velandia noted that while the second half of the year could see growth above 2%, this is likely due to favorable base comparisons rather than stronger underlying activity. The downward revision underscores broader challenges facing Chile’s economy. Rising fuel prices have had a significant negative impact, particularly given Chile's status as the largest net importer of oil in the region. The sharp rise in oil prices since February, driven by tensions between the United States and Iran, has reduced household disposable income and dampened consumer confidence. These pressures have been compounded by higher labor costs, which have affected employment levels. Furthermore, the mining sector, once a key driver of growth, has shown signs of structural issues that limit its ability to consistently support high rates of expansion. Chile’s economic outlook remains constrained by these multiple headwinds. Without a global crisis, the country has experienced a notable decline in growth expectations within just six months. Velandia emphasized that this level of contraction is unusual and highlights the need for policy interventions aimed at stabilizing both consumption and investment. The current environment suggests that achieving even modest growth targets will require careful management of macroeconomic variables, including inflation control and fiscal discipline. Looking ahead, Velandia expressed cautious optimism for 2027, projecting GDP growth close to 3%. This would represent a marked improvement compared to the current year and aligns with estimates of Chile’s potential GDP growth rate of around 2%. Such a scenario would signal a return to more sustainable growth patterns, though it depends heavily on continued stability in global markets and domestic policy effectiveness. Regarding monetary policy, Velandia outlined a baseline expectation of maintaining interest rates at 4.5% through the end of 2027. This stance aims to balance inflationary pressures with the need to support economic activity. The central bank’s approach will likely remain focused on preserving price stability while allowing room for gradual stimulus should conditions warrant it. The revised growth projections reflect a complex interplay of internal and external factors affecting Chile’s economy. As the nation navigates these challenges, the path forward will depend on how effectively policymakers can address structural weaknesses and mitigate the ongoing impacts of rising costs and shifting market dynamics.