Chile's economic activity falls unexpectedly in July dragged by mining sector

Chile's ‌economic activity declined in July, central bank data showed on Tuesday, missing market expectations due to a slowdown in the key mining sector. Chile's economic activity declined 1.5% when compared to a year earlier in July, missing a 0.4% expansion ‌forecast from economists polled by Reuters and deteriorating from the previous month when it recorded a revised 2% ‌annual expansion.

Goods production posted the sharpest decline, falling 3.2% year over year. "The result was driven by the performance of the mining sector, particularly copper, which was affected by lower ore grades, maintenance, and adverse weather conditions," the central bank said in the report. The mining sector ⁠of ​the world's largest copper producer registered ⁠a 9.3% year-on-year decline in July.

The IMACEC index, which accounts for about 90% of the Andean country's gross domestic product, returned ⁠to negative territory after a short hiatus in June. Adverse weather conditions also affected the manufacturing sector, which fell 3.1% year-over-year and "saw ​a decline in the production of fuels and chemicals," the bank added.

"The stage is set for another ⁠seasonally adjusted contraction in Q3 2026, as August is not expected to be particularly strong, and everything will hinge on September's performance," Jorge Selaive, ⁠chief ​economist at Scotiabank Chile, said on X. DOWNWARD REVISIONS

Following the release of sluggish manufacturing and copper production data on Monday, analysts revised down their forecasts for economic activity, to levels well below those previously expected by the ⁠market. Santander analysts projected a decline of about 2% from the same month a year earlier, while analysts at Coopeuch ⁠and ClapesUC were slightly less ⁠pessimistic, forecasting year-over-year declines in the IMACEC of around 1% and 0.9% respectively.

On a monthly basis, the IMACEC index registered a 1.7% decrease, the central bank added.