Minister Quiroz Confirms Dramatic Downturn in Chile’s Economic Projections: Growth for 2026 Slashed from 2.1% to 0.7%

Original article: Quiroz confirma fuerte derrumbe en la proyección económica: crecimiento para 2026 cae de 2,1% a 0,7%

Finance Minister Jorge Quiroz has confirmed a dramatic downturn in economic projections for Chile, noting that the growth forecast for 2026 has plummeted from 2.1% to 1.8%, and finally to 0.7%.

«2026 is projected to be the lowest year since 2003, reducing GDP by at least one point,” he stated during the presentation of the 2027 Budget Bill before the Special Joint Budget Committee.

The head of the fiscal purse attributed this significant reduction primarily to cyclical factors, including the decline in copper production.

The administration of José Antonio Kast had already downgraded its initial growth estimate from 2.1% to 1.8% in July, largely due to reduced output in the mining sector; the figure confirmed by Quiroz marks a decline of 1.1 percentage points (p.p.).

The finance chief illustrated a situation of more severe deceleration than anticipated, necessitating a revision of priorities.

Regarding domestic demand, the Treasury also adjusted its expectations: the revision moved from 2.4% to 1.3%, while the expected average inflation rate increased from 3.6% to 3.8%.

Simultaneously, the Budget Directorate (Dipres) released its Public Finance Report (IFP) for the third quarter of 2026, correcting the mining GDP from -0.9% to -3.3%, while the non-mining figure dropped from 2.2% to 1.2%.

The budget project presented by Quiroz outlines a 1.5% increase in public spending compared to the projected execution for 2026, and according to the secretary of state, aims to reduce the structural deficit from 2.6% this year to 1.8% in 2027.

To justify the cuts to social programs, he stated that the fiscal scenario requires a review and reassignment of resources towards policies deemed to have the greatest impact by La Moneda. “Defining priorities also means making decisions. Governing often involves prioritizing, but after prioritizing, we must decide,” he articulated before the parliamentary body.

The fiscal projections were updated during this presentation. The actual deficit, which last year was 2.8% of GDP, is projected at 1.8% for both 2026 and 2027. According to Quiroz, this one-point reduction equates to approximately US$3.5 billion less in financing.

The discussion then focused on the borrowing authorization requested for 2027, which amidst the cuts, reaches up to US$25.6 billion. This figure significantly exceeds the US$17.4 billion originally included in the 2026 Budget, the last under former President Gabriel Boric. However, the José Antonio Kast administration requested an additional authorization of US$6.2 billion for this budget, thus raising the current limit for this year to US$23.6 billion. Consequently, compared to the currently authorized amount, the request for 2027 represents an increase of US$1.4 billion.

The minister explained that the borrowing amount includes the payment of existing obligations as well as the financing needs for 2027.

«It arises from a relatively simple calculation: we first need to pay previous debts, and then cover the deficit plus spending below the line,” he stated in remarks reported by Diario U. de Chile.

Critique of the Budget and Borrowing

From the opposition, Deputy Jaime Bassa (FA) questioned the presented project, stating that the Kast government “needs to understand that the discussion on the budget cannot continue to be about how much to spend and how much to borrow.”

“There needs to be a discussion on how to complexify our productive matrix, so the country can produce more and produce differently,” he argued.

Bassa also referred to the debt burden on families: “Because this debt that the President is leading us back into reflects private debt, and families are living a real form of modern slavery due to over-indebtedness and the resulting arrears.”

He further noted that there has already been an increase of US$6.2 billion in borrowing during this 2026 and that asking for up to US$25 billion more is a “nonsense,” as it will be paid for by Chilean families.

Senator Iván Flores (DC) also criticized the borrowing request, pointing to La Moneda’s tax decisions, particularly the mega economic-tax reform.

«The government continues to shift responsibility onto the citizens; this request is hard to comprehend, given that they initiated a mega-reform that creates an enormous fiscal gap,” he expressed, as recorded by the cited media.

«They cannot keep blaming previous governments and offloading everything onto the people. The truth is they are not able to acknowledge that the sense of bankruptcy, chaos, and the critical state of the country was sown by them,” he emphasized.