Pipeline of $33 billion in environmental approvals signals Chile's growth paradox.

The number that shook prevailing certainties about Chile's economic cycle this week did not come from the Central Bank or the FX markets: it came from the Environmental Impact Assessment System. According to a study by the Studies Division of the Ministry of the Interior, the Kast administration accumulated environmental approvals worth US$32.923 billion between March 11 and the end of August — a historic record that quadruples what was achieved in the same period under Piñera's second government and nearly quadruples the figure logged under the Boric administration. The paradox is stark: while July's Imacec fell 1.5% month-on-month — dragging annual growth below 1% — and second-quarter GDP contracted 0.2%, the pipeline of future investment has never been fuller. Chile is not simultaneously stagnant and booming by accident; it is living the time lag between investment decisions and their productive materialization, and that gap defines the country's economic horizon for the next two years.

The 9.3% mining contraction in July, which according to La Tercera also dragged down manufacturing, explains most of the cyclical setback. But analysts warn that the deterioration of the labor market and household expectations are amplifying the drag on consumption and services, creating a short-term negative loop that coexists with structurally positive signals. The government appears to be betting that supply-side measures — 20-year tax invariability for projects under environmental review, the reduction in corporate tax burden included in the Reconstruction Law, and the capital markets reform expected to be announced this week — will change that equation before the next electoral cycle. According to estimates by LyD and Pivotes cited by Diario Financiero, roughly 150 projects currently in the pipeline could sign contract-laws with the State, locking in favorable tax conditions for a generation of investments.

SOFOFA, whose chair Rosario Navarro headlined this week's seminar "Chile–China: Looking at the Next Decade," reinforces that diagnosis from the business-association front. Bilateral trade with China exceeded US$67 billion in 2025, consolidating Beijing as the country's top trading partner. In parallel, the industrial guild presented a proposal for five labor reforms — including universal severance, universal childcare, and hourly contracts — and its own study projecting the creation of between 80,800 and 330,000 jobs if the First Category Tax is cut by four percentage points, from 27% to 23%. With Chile ranked as the ninth OECD country with the highest corporate rate and 36th of 38 in the Tax Foundation's tax competitiveness index, the sector's argument rests on solid comparative footing.

The public policy front is adding more movement. The Finance Ministry clarified the operational details of the one-year suspension of VAT on housing, whose exemption will take effect in November with retroactive effect for certain transactions predating the law. The measure arrives at a time when the real estate industry is showing signs of selective reactivation: a US$30 million multifamily project has been announced in downtown Santiago, and the Arica City Center complex — a private investment of more than US$120 million including a hotel, casino, and office tower — is beginning the sale of its commercial units. On pensions, the Superintendency published the details of the new investment regime for generational funds, sparking debate between those who view the auction of the stock as a step back toward a "petty fight over short-term returns" and those who argue that the new scheme places Chile "among the countries with the greatest innovation" in pension architecture. The underlying discussion — whether regulation by resolution of the Superintendency amounts to political discretion — was addressed directly by Soledad Hormazábal, a former member of the Pension Technical Committee, who noted that the previous regime was also defined via that same channel.

On the budget front, Dipres has placed the financial statements of state universities under scrutiny, a sign that the fiscal consolidation of the 2027 exercise — described by Diario Financiero as the "end of fiscal voluntarism" — will include discipline over entities that generate contingent liabilities backed by the State. Transport industry associations, meanwhile, still have no clarity on the final size of the diesel hike after Finance Minister Jorge Quiroz announced an increase of $250 per liter in three stages. Uncertainty over whether the hikes could be larger, depending on monitoring of international crude prices, adds an inflationary variable that would complicate any rebound in consumption.

What to watch closely in the coming days is threefold: the details of the capital markets reform, whose announcement is scheduled for this week and which could have a direct impact on the financing of investment projects approved by the SEIA; the evolution of August's Imacec, which will tell us whether July was a one-off trough or the start of a new phase of deceleration; and the legislative progress of the hourly contract in the Senate, where the tension between labor flexibility and female incorporation into the workforce — an issue on which SOFOFA and civil society hold divergent positions — will shape part of the political-economic climate of the quarter.