2026/07/01 | Andrés Pérez M., Vittorio Peretti, Andrea Tellechea & Ignacio Martínez
According to the BCCh, the May monthly GDP proxy (Imacec) posted an annual contraction of 0.9% (-1.2% in April), slightly below our -0.6% call (Bloomberg: -0.4%). The non-mining Imacec recorded a modest annual expansion of 0.7% (0.4% in April).
The overall results were explained largely by an expected sharp decline in mining activity (down 11.6% YoY). Additional negative contributions came from manufacturing (adverse weather hindering fish processing), which might be related to El Niño. Growth support from commerce and services weakened with retail activity growing 0.8% YoY (2.1% in April) and services expanding by a mild 1% (pulled up particularly driven by personal services such as healthcare and education).
Sequentially, activity has plateaued. Total activity fell by a mild 0.2% Mom/SA while the non-mining component dipped by 0.3% MoM/SA. During the quarter ending in May, total activity posted a 0.3% QoQ/SAAR variation (-1.3% in 1Q26), with non-mining activity rising by 1.1% QoQ/SAAR (-0.5% in 1Q26).
Using the latest rolling quarter, the carryover (SA) for 2026 GDP growth now sits at 0.0%, and 0.5% for non-mining GDP.
We cannot rule out a technical recession. According to our estimates, a sequential month-on-month contraction of 0.28% in June would trigger a technical recession at the start of 2026.
2Q26 growth falls short of the BCCh’s IPoM forecast. Average annual growth in April-May reached -1.0% YoY, implying an important acceleration is needed to reach the 2Q26 IPoM implicit forecast of +0.4% YoY.
Incoming data continues to point to a weak start to the year, with low carryover, a still-fragile labor market constraining consumption, and deteriorating business confidence.
Our Take: While the balance of risks tilts to a deeper activity downturn in the short-term (1.5% growth call for 2026), our scenario sees an improving investment cycle, supported by a strong pipeline of projects and policy efforts to mobilize private capital, gradually gaining traction and sustaining the recovery into 2027. The string of recent data adds weight to the narrative of subdued domestic demand gaining relevance, in addition to sector-specific supply shocks.
With activity data still weak, and labor market slack growing and the inflation shock falling short of market expectations, the market-implied policy rate path will likely consolidate a partial pricing of lower rates later this year, adding pressure on the CLP. Our baseline monetary policy scenario remains unchanged, with the policy rate at 4.5% over the forecast horizon.
Our preliminary estimate for June’s IMACEC (to be released August 3rd) is 1.0-1.5%, in part aided by less demanding base effects.