Chile's copper boom masks domestic economic collapse.

Chilean copper exports topped US$30 billion in a single half-year for the first time ever, but that historic milestone landed on the same day the metal retreated in London and Comex on escalating tensions in the Strait of Hormuz, the Senate narrowly approved US$6.2 billion in additional borrowing authority, and unemployment climbed to its highest level since the pandemic. Rarely has the gap between Chile's export performance and the health of its domestic economy been so pronounced.

Central Bank data tell the story eloquently: the trade balance posted a US$17.29 billion surplus between January and June, up 49% from the same period in 2025 and the largest half-year figure on record. Total shipments reached US$60.354 billion, a 14.2% year-over-year increase. Copper was the undisputed protagonist, with US$30.236 billion in exports, 11.5% more than a year earlier. In that external context, Chile negotiates from a position of strength; at home, the story is different. Unemployment climbed to 9.4% in the March-May rolling quarter, the highest reading since June 2021, and the Central Bank's Job Postings Index fell 6.1% year-over-year in June, marking eight consecutive months of contraction. The economy closed May with five straight months of contraction, and former Central Bank president Vittorio Corbo, at a seminar hosted by Deloitte, put the probability of a technical recession at 30%, while assigning a higher probability to a rate cut by the monetary authority.

The divergence between the external sector and domestic demand explains much of the trading session. The IPSA advanced 1.33%, closing above the 11,000-point mark on the back of BCI, Falabella and Mall Plaza, amid expectations that June's CPI will print negative — which would open the door to rate cuts. HSBC, for its part, maintained its overweight rating on Chilean equities and projected the dollar at $870 by year-end, further estimating that each percentage point cut in the corporate tax rate would lift earnings per share by roughly 1%, in line with the tax reform the government is bringing to the negotiating table. The exchange rate, however, closed higher above $930, pressured by the global dollar's recovery — the dollar index rose 0.21% — and by falling copper futures on Comex, which retreated 0.8% to US$6.18 per pound. Hormuz tensions pushed oil prices higher and produced, as Saxo Bank commodities strategist Ole Hansen described it, "the initial reaction of metals to rising crude prices," leaving markets waiting to see whether the situation escalates or dissipates.

On the fiscal front, the Senate approved by a 28-15 vote with one abstention the bill expanding the government's authorized borrowing by US$6.2 billion, raising the total ceiling to US$24.2 billion. Finance Minister Jorge Quiroz attributed the need to the accumulated fiscal deficit, currency pressures and unavoidable spending commitments. Fully drawing down the newly authorized debt could push public debt to between 44.6% and 44.8% of GDP, brushing up against the 45% self-imposed limit endorsed by the Autonomous Fiscal Council. The approval margin was tight and the process was marked by internal tensions within the ruling coalition, including a dispute over tax invariability that split even the Socialist Party during debate on the omnibus bill. The fiscal position, deteriorating in tandem with an unprecedented trade surplus, illustrates the structural paradox of a country whose export wealth fails to translate into fiscal revenues sufficient to sustain its spending commitments.

On regional integration, Chile and Argentina reaffirmed in Buenos Aires the 1997 binational mining treaty, targeting cross-border projects worth more than US$20.7 billion. The reactivation of the agreement comes at a moment of strong global appetite for critical minerals and coincides with Foreign Minister Francisco Pérez Mackenna's tour of Washington, where he met with representatives from Walmart, Amazon, Google, Boeing, Rio Tinto and other companies to promote the Choose Chile program, presenting tax reductions and streamlined permitting as signals of openness. SOFOFA, for its part, insisted that cutting the First Category corporate tax by four points — currently at 27%, one of the highest in the OECD — could generate more than 200,000 jobs over four years, an argument gaining urgency as the labor market deteriorates month after month.

In the financial and pension sectors, Fintual set up Fintual Servicios Previsionales SpA in April and raised its capital by US$8.6 million in late June, in what the market reads as preparation to bid for AFP business. The firm, which has revolutionized retail investment management in Chile, would enter to compete in a system on the verge of radical transformation: the Superintendency of Pensions published its proposed investment regime under the generational fund system, replacing the multi-fund structure with ten age-based cohorts. LarrainVial characterized the impact as "marginally favorable" for local equities and sovereign bonds, though it warned that the effect on the Chilean peso "is less clear." The tender for the Disability and Survivorship Insurance, the country's largest collective contract with an annual premium close to US$1.9 billion, was settled with Penta Vida excluded from the awardees. The isapres, meanwhile, closed the first quarter with profits of $31.274 billion — reversing losses of $868 million in the same period of 2025 — thanks to a 23% drop in the cost of medical leave, although the "short law" bars them from distributing dividends until they settle their debt with members.

The coming days will concentrate several catalysts. The release of June's CPI will determine whether Chile in fact records monthly deflation and whether the Central Bank has room to cut rates at its next meeting. The Chamber vote on the bill to settle the debt with power distribution companies — whose total cost from the February 25, 2025 blackout was quantified at US$984 million according to a study commissioned by Enel — could clear regulatory uncertainty in the energy sector. And the evolution of Middle East tensions will remain the exogenous variable that determines whether copper recovers ground or whether the exchange rate resumes its upward pressure, complicating inflation projections and the Central Bank's room for maneuver.

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**Veolia (EPA: VIE)** — The French environmental services multinational announced the