Copper Pulls Chile's Economy Back Around
The Finance Minister Declares June the Turning Point

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Chile's Finance Minister Jorge Quiroz said on July 5, in an interview with the local daily La Tercera, that "the economy reached its turning point in June," declaring a recovery for the second half of 2026. The government projects annual GDP growth of 2.2% — for the Chilean economy under the Kast administration, which had been stuck in contraction, it is the most optimistic outlook of the government's first year in office. The star of the recovery is copper. The pillar of Chile's exports is, for the first time in a while, riding a strong tailwind.

What happened

The research firm Fitch raised its 2026 copper price forecast by 21%, to $11,500 per ton. The shift to EVs and the demand for power infrastructure driven by the construction rush of AI data centers are tightening supply and demand, and prices are in their highest range since the "supercycle" of the 2000s. Foreign capital inflows into Chilean peso-denominated bonds have reached record levels since the start of 2026, and markets have begun to price in this recovery scenario.

Mining investment is moving in concrete terms as well. US-based Freeport-McMoRan and Chile's state-owned Codelco are pushing ahead with an expansion of the El Abra copper mine in the north (a $7.5 billion project), and by one estimate Chile's overall mining investment pipeline for 2025–2034 reaches $105 billion.

Context: what "June as the turning point" means

In his first policy address after taking office, President Kast made fiscal austerity a headline commitment, alongside public security. Because austerity cools demand in the short term, the Chilean economy spent the government's first months in a contractionary phase. Behind the finance minister's flat assertion that "June was the turning point" is the expectation that the contraction in the monthly economic activity index (IMACEC) will end in June. The scenario the government is sketching is that the copper price tailwind arrived just as the economy was climbing out of the austerity trough.

That said, most private economists see full-year 2026 growth at around 1.3%, considerably more cautious than the government's outlook. With the risk of a global demand slowdown and worries about a decelerating Chinese economy still in play, no one can yet say for certain whether copper prices will hold at high levels through the second half of the year.

The question: the capacity to dig, and the conditions to keep digging

Whether the $105 billion investment pipeline actually moves will not be decided by price alone. Mining expansion always sits side by side with water use, the rights of Indigenous communities, and environmental impact assessment. Even under a Kast government eager to attract investment, skipping that coordination means projects grind to a halt at the stage of litigation or community consent. If anything, what matters for long-term investment is not pushing approvals through "fast" but getting them through "without conflict."

Looking across Latin America, economic conditions remain a patchwork — Argentina's cooling inflation among them. Within that picture, Chile has long been described as "the safe haven among emerging markets." The copper market and domestic investment trends in the second half of 2026 will be a barometer of whether that reputation can be maintained.

My perspective

Whenever I read about the business cycle in a resource country, what I always keep in mind is the simple fact that "a boom carried in by prices leaves together with the prices." Compared with other resource countries, Chile was early to build institutions that brace for price swings, such as the mechanism for setting copper revenue aside in stabilization funds. Even so, the gap between the government's 2.2% and the private sector's 1.3% growth outlooks comes down, in the end, to nothing more than a difference in how long each thinks copper will hold.

The new narrative that data centers and EVs will lift copper demand is an attractive one — but the more attractive the narrative, the more I believe fiscal and social security plans should be built on conservative numbers. It is in how a country spends its booms that its maturity shows.

Glossary

cobre = copper; the single most important word for talking about Chile's economy. punto de inflexión = turning point; the keyword of the finance minister's remarks. IMACEC = the monthly economic activity index published by Chile's central bank; it is used something like a monthly version of GDP.

A boom carried in by prices leaves together with the prices. What is being tested is not the capacity to dig, but the conditions to keep digging.

※ This article is the author’s commentary based on public information. Please confirm the latest figures, dates and procedures with governments and primary sources. Quotations are kept minimal and sources are cited.