Economy and Real Estate Market in Chile May 2025
Inflation in Chile continues to show signs of moderation. As of May 2025, the Consumer Price Index (CPI) has a year-on-year variation of 4.1%, down from the 4.7% recorded in February. Core inflation (excluding food and energy) remains close to 3.8%. This downward trajectory has allowed the Central Bank to keep the Monetary Policy Rate (TPM) at 5%, although during its Monetary Policy Meeting in May, the possibility of a cut in the second half of the year was discussed, should inflationary pressures continue to ease.
Inflation and Monetary Policy
Part of the moderation can be explained by the recent appreciation of the Chilean peso, the drop in oil prices (which fell to ~US$64 per barrel in May), and a general slowdown in the inflation of goods. However, electricity rates continue to adjust upward due to the gradual withdrawal of subsidies implemented during the pandemic.
Economic Activity and Labor Market
The Chilean economy showed mixed signals in the early months of the year. The March Imacec grew by 1.9% year-on-year, while April showed a variation of 2.1%, confirming moderate but stable growth. The Central Bank's projection for GDP 2025 remains in a range between 1.75% and 2.75%, with a midpoint of 2.2%.
Mining, particularly copper, has sustained activity with prices close to US$4.35 per pound, supported by a recovery in global industrial demand. Tourism remains another pillar of growth, driven by a sustained increase in the arrival of foreign visitors, especially from Brazil and Europe.
In contrast, private investment remains weak. Gross fixed capital formation accumulated a decline of 1.2% in the first quarter of 2025. Regulatory uncertainty and the cost of credit continue to weigh on investment decisions, especially in construction and infrastructure.
Unemployment remains high, around 8.6% according to the latest measurement from INE (mobile quarter Feb-Apr 2025), with net job creation being very limited. Labor force participation has grown, but the pace of market absorption has not been sufficient.
Financial Market
The Chilean financial environment shows signs of stability, although with persistent challenges. Demand for credit remains weak. The Bank Credit Survey for the second quarter indicates that 20% of banks perceive lower demand for consumer and housing loans, while granting conditions have remained largely unchanged.
In the mortgage market, rates remain high (around 5.5% annually for 20-year loans), significantly limiting eligibility: only 16% of households currently qualify for a mortgage loan. The SME segment has experienced a slight increase in financing demand, but with stricter credit standards, especially for sectors like construction.
Regarding financial markets, the Santiago Stock Exchange has maintained its upward trend: the IPSA has accumulated an increase of more than 11% so far in 2025, driven by exporters and the better exchange rate. The Chilean peso has appreciated close to 6% against the dollar since February, favored by copper prices and the influx of portfolio capital. This dynamic has helped mitigate part of imported inflation.
International Context
Globally, the scenario remains mixed. The United States showed a contraction of -0.2% in the first quarter of 2025 and keeps its interest rate at 4.25–4.50%. The market anticipates one or two cuts toward the end of the year, which has eased pressure on emerging currencies. The global dollar has weakened slightly, benefiting currencies such as the Chilean peso.
Trade tensions with China and other countries continue but have not escalated significantly. The April court ruling that blocked new tariffs was appealed, and a resolution is expected in the second half of the year. Commodities have shown mixed behavior: while copper remains strong, oil has retreated nearly 8% since January, contributing to a moderation of energy prices.
In South America, rising prices for commodities such as lithium and soy have improved the external accounts of several countries, but political instability in key economies (such as Argentina and Peru) continues to generate volatility. Chile, for its part, has maintained macroeconomic stability, allowing it to continue attracting financial investments in fixed and variable income.
Conclusions and Projections
Chile is undergoing a year of moderate growth, with inflation on the decline and a still fragile labor market. Projections point to inflation finishing the year below 4% and GDP growing around 2–2.5%. While private consumption and investment show faint signs of recovery, external activity (copper and tourism) remains the main support for growth.
The financial market offers specific opportunities: stocks have performed well and could continue to benefit if rates drop slightly toward the end of the year. However, real rates remain low or negative, making traditional deposits less attractive. For investors, the recommendation is to diversify, monitor external risks, and stay alert for signs of rate cuts or additional fiscal stimuli.
In the real estate market, those with financing can find good buying opportunities in a declining price environment. For developers, however, the outlook will remain complex for at least the rest of 2025. Sales remain depressed, and the recovery of demand will be slow as income and access to credit do not significantly improve.
In summary, the Chilean economic context remains in an adjustment phase. The macroeconomic fundamentals are solid, and institutional stability continues to be a key anchor, but external risks—global trade policies, international financial conditions, and commodity prices—remain relevant. Strategic decisions in the financial and real estate sectors must continue to consider a volatile and cautious environment.