Chile’s economy contracts 0.1% in Q2, raising rate cut expectations

Investing.com -- Chile’s economy unexpectedly contracted by 0.1% in the second quarter of 2025 compared to the previous quarter, falling below analyst expectations of a 0.1% expansion.

The quarterly decline marks a significant slowdown from the 0.4% growth recorded in the first quarter of 2025. On a year-over-year basis, economic growth decelerated sharply to 1.6% from 3.3% in the previous quarter.

The contraction was primarily driven by weakness in private consumption and exports, according to economic data released Tuesday.

The unexpected economic downturn strengthens the case for the Chilean central bank to implement a 25 basis point interest rate cut at its December meeting, which would bring the policy rate down to 4.50%.

Both market consensus and economic forecasts had anticipated modest growth for the quarter, making the contraction a notable deviation from expectations.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.