Chile's jobless rate hits nine-year high as growth forecast plummets to 0.7%

The tragedy deep inside the world's largest copper deposit opens this week with a brutality that extends beyond human grief: two subcontractor workers at Codelco's El Teniente Division died on Sunday after a landslide buried their vehicles in the Rajo Sur sector while they were carrying out inspection work in weather conditions that had already forced a halt to operations in that area. The PDI's Homicide Brigade is investigating the incident, and the contractors' union is demanding to know why personnel were sent into a zone classified as critical. The question is far from trivial: Codelco has been dragging operational and corporate governance irregularities that the Dual Minister of Economy and Mining, Daniel Mas, had to publicly acknowledge this week, and the accident arrives at a moment when the state copper producer was already facing political, union, and media pressure on multiple fronts.

The death at El Teniente does not occur in a vacuum. A short distance away, in corporate terms, Minera Centinela — controlled by the Luksic group — has an active strike by its unions, although the company says operations continue. Both sides resume negotiations this Tuesday in a voluntary mediation convened by the Labor Directorate. The Centinela conflict, combined with the latent threat of tariffs, has helped sustain copper prices, which rebounded strongly this week. In that context, the dollar closed stable below $980, breaking a streak of consecutive weekly gains. The drop in red metal inventories in China — whose restocking process is expected over the coming weeks following the Asian country's long holiday — adds further support to the price. The IPSA, meanwhile, surpassed 11,000 points and closed a bullish week, partly driven by political optimism in Brazil, while Wall Street absorbed with relative calm the news that OpenAI had billed less than projected.

The macroeconomic backdrop, however, is far from reassuring. The State of Public Finances presented during the week lowered growth projections for 2026 to just 0.7%, with an expected recovery of 3.3% for 2027 — a figure many economists view with skepticism. Dual Minister Mas himself admitted on TVN that the economic scenario turned out to be "much more negative" than anticipated at the start of the Kast administration, citing two unforeseen shocks: the rise in oil prices stemming from the war in the Middle East and the devastating frontal systems that struck the Atacama and Coquimbo regions, whose reconstruction will require "several hundred million dollars," in his own words. Even so, Mas defends the goal of 100,000 new jobs between now and March, after the government, by its own account, hit the 50,000 positions committed between July and October. The unemployment rate at 9.6% — the highest in the region and the second-highest among OECD countries — keeps that narrative under constant pressure.

The president of the Senate, Paulina Núñez of Renovación Nacional, was blunt: "If there is an emergency in Chile, it is unemployment." Her diagnosis clashes with the government's position, which is betting on private investment as the engine of job creation rather than expanding spending. Therein lies the most relevant political tension of the week. The former vice-president of the Autonomous Fiscal Council, Hermann González, offers a more nuanced but equally worrying reading: meeting the structural deficit reduction target is necessary, but deepening the fiscal adjustment amid weak activity and recession risk is, in his view, "debatable." The projected structural deficit is 2.6% of GDP, and González further warns that fiscal difficulties post-2027 will be considerable — a horizon markets have yet to price in clearly.

Against that backdrop, the Kast government presented its first 2027 Budget bill, with total spending of $91.18 trillion, a real increase of 1.5% over the projected 2026 execution. Health, Education, and Labor concentrate the bulk of the resources. The parliamentary discussion has begun with high tension, particularly in the Fourth Subcommittee led by Senator Yasna Provoste. Simultaneously, President Kast signed into law the National Reconstruction and Economic and Social Development Act, described by the government as the economic centerpiece of his administration, and visited the Central Bank to meet with the Council on the current economic moment, just months before Rosanna Costa completes her term as the institution's president.

On the corporate front, the week's most surprising story is the accelerating deterioration of the AFP Fund E: the system's most conservative instrument, with nearly 770,000 affiliates, has accumulated a real loss of 10.39% in 2026, its second-worst year since the creation of the multi-fund system. The problem goes beyond bond exposure: the fund managers added interest-rate swaps that amplified the impact of rising rates, and according to the analysis published by Diario Financiero, these derivatives alone account, through August, for the entire decline of the fund. It is a disclosure that will carry political and regulatory consequences difficult to ignore.

On the positive side, Latam Airlines received a double credit rating upgrade from S&P and Fitch, leaving it just one notch below investment grade, thirteen years after its merger with TAM and after weathering a pandemic and a Chapter 11 process. That the news arrives amid a full-blown fuel price shock — the main operating cost for any airline, exacerbated by the Middle East conflict — gives it considerable symbolic weight. In infrastructure, the Puerto Exterior de San Antonio launched the tender for enabling works with initial financing of US$50 million from the Development Bank of Latin America and the Caribbean (CAF), taking a concrete step toward what will be one of the most significant port megaprojects on the Pacific coast. And on the trade front, Sofofa celebrated the 20th anniversary of the FTA with China, highlighting bilateral trade that surpassed US$67 billion in 2025, with a high-level business mission planned for November in the context of the APEC CEO Summit.

What lies ahead demands attention on several simultaneous fronts: the outcome of the Centinela mediation on Tuesday will determine whether the conflict escalates or de-escalates, with direct implications for the copper price and national output. The PDI investigation at El Teniente could lead to criminal liability and reopen the debate on safety standards in subcontracted mining. And the budget debate in Congress, which is just beginning, will be the arena where it will be decided whether the government can sustain its narrative of orderly fiscal adjustment without yielding to mounting pressure from an opposition — and from its own allies — demanding more spending to tackle unemployment.