Chile's economy contracted 0.2% year-on-year in the second quarter of 2026, marking two consecutive quarters of declining gross domestic product. According to the Central Bank, this contraction followed a 0.3% decline recorded between January and March, placing the country in technical recession.
Lower copper production, the country's main economic engine, was the determining factor in the result. The Central Bank noted that mining was affected by lower copper concentration in extracted ore and by preventive shutdowns at some of the country's main mining facilities. Declines in fishing and construction also contributed to the negative performance, while personal services and commerce showed stronger results.
The data presents a challenge for the Government of President José Antonio Kast, who came to power with the aim of revitalising an economy that has shown weak growth over the past decade. This month, the administration approved an economic reform that includes a gradual reduction in the tax on large companies, falling from 27% to 23% over four years.
The Government also authorised state-owned Codelco, the country's largest copper producer, to reinvest all of its profits in operations for the first time. According to authorities, these measures seek to ease the burden on the state company's debt and increase its productive capacity at a time of weakness for the mining sector.