Event
The Chilean economy has shown notable resilience in recent months. While the IMF World Economic Outlook (WEO) from April 2025 projected a 2% growth rate for 2025, the Central Bank of Chile revised this upward in June, forecasting a growth range from 2% to 2.75%. This upgrade reflects stronger-than-expected export performance, even in the face of the US tariffs in effect since April.
Impact
Chile’s economic resilience is particularly striking given the 10% blanket import tariff imposed by the US in April. As a result, most Chilean exports – especially food products – have lost the duty-free access they previously enjoyed under the Chile-US Free Trade Agreement. However, the impact is somewhat contained: the US only represent 15% of Chilean exports while copper, Chile’s main export and making up about a third of exports to the US, is exempt from tariffs for now and performs strongly at relatively high prices.
That said, this exemption may be temporary. The US Department of Commerce is currently investigating copper imports, with growing political pressure to prioritise domestic mining and smelting for national security reasons. Additionally, copper prices could face downward pressure due to geopolitical tensions and the recent discovery of one of the largest copper mines in Argentina. Furthermore, the expanding Chinese copper refining production (accounting for almost half of the global refinery production) could also harm Chilean copper refineries (accounting for almost a tenth of the global refinery production). Given that Chile is the world’s largest copper producer, any significant drop in metal prices or export volumes could negatively affect its economy and its current account, which relies heavily – for nearly half of its revenues – on ore and metal exports.
Chile’s ST political risk rating – which represents the country’s liquidity – is in the second lowest risk category 2/7. This can be explained by the country’s good access to financial markets, adequate level of foreign exchange reserves and modest level of short-term external debt. Its MLT political risk rating is in category 3/7. On the one hand, this can be explained by the country’s moderate external debt (service) ratios and relatively low economic diversification, and on the other hand by its good institutional quality and healthy public finances. The outlook for both country risk classifications is stable for now.
Analyst: Jolyn Debuysscher – J.Debuysscher@credendo.com