Can Chile’s new government reignite growth?

Chile enters 2026 at an inflection point. The election of President José Antonio Kast marks the country’s sharpest rightward shift since its democratic transition, raising expectations among business and foreign investors that Chile can move beyond years of political volatility and sub-potential growth.

For Canadian companies in mining, energy, infrastructure and critical minerals, the central question is whether the new administration can translate a pro-investment agenda into durable growth without reigniting the social tensions that have constrained policy execution. Legitimacy and delivery will be decisive.

Chile’s political inheritance: Polarization, fatigue and fragile consensus

After the 2019 social upheaval, two failed constitutional rewrite attempts left Chileans wary of sweeping change yet dissatisfied with the status quo. Traditional political parties have lost ground, while a fragmented Congress requires case-by-case bargaining, as social pressures continue to outpace legislation.

When neither presidential candidate secured an absolute majority in the first round of the November election, the runoff crystallized the country’s polarization. A continuity candidate from the communist left faced a far-right contender with a history of support for Augusto Pinochet. President Kast now inherits a politically fatigued country searching for stability and tangible results.

For investors, Chile’s long-standing reputation for predictable macroeconomic policy and strong institutions is under strain. Protest cycles, labour activism and litigation risks are now structural features of the operating environment. Geopolitical headwinds—including the United States–China rivalry, shifting trade policy and Iran-linked energy market volatility—could add inflationary pressure and heighten social tensions.

The question is no longer whether Chile can design sound policy, but whether it can deliver—quickly and at scale. Early indicators will include permitting turnaround times, labour disruptions and progress on security and migration management.

Mining, copper and lithium: Rebuilding social licence

Nowhere are these challenges more visible than in mining. Chile is the world’s largest copper producer and second-largest lithium producer, with more than US$100 billion in mining projects expected over the next decade, according to Cochilco, the country’s mining policy advisory agency. Geology isn’t the constraint; legitimacy is.

Permitting delays, labour disputes, water and energy constraints and rising security concerns have weighed on output just as global demand for critical minerals accelerates. Communities are demanding clearer commitments on environmental impacts, local jobs and procurement, and how regions will share in the gains—or absorb the disruption.

A Chilean saying resonates with Canadian investors: Las cuentas claras conservan las amistades—clear accounts preserve friendships. In country-risk terms, clear rules preserve capital. When benefit-sharing, environmental safeguards and compliance expectations are explicit and consistently enforced, conflict risk declines; when they are not, uncertainty rises and disputes migrate to the courts. The dynamic extends beyond mining to the broader political economy.

From pro-market rhetoric to credible execution

President Kast’s market-friendly messaging and technocrat-heavy cabinet signal an intent to restore confidence and lower the political temperature. But social buy-in isn’t rebuilt through announcements alone. As Chileans often say, El movimiento se demuestra andando—credibility comes from execution.

In mining, that means effective consultation and predictable enforcement. More broadly, the administration will need durable, cross-societal support to sustain its agenda over time.

Reducing permitting risk and accelerating investment

Chile’s core challenge lies less in policy design than in implementation. The government is seeking to address longstanding bottlenecks. The previous administration’s Framework Law on Sectoral Authorizations targets permisología—permit overload—by shortening approval timelines. Updates to environmental assessment processes aim to improve efficiency without weakening standards.

Early decrees to expedite delayed permits and advance the Plan Desafío 90 agenda are intended to signal momentum. Delivery matters for country risk: When approvals stall, investment slows, growth underperforms and fiscal pressures mount—undermining commitments to austerity and tax competitiveness.

President Kast’s economic agenda broadly aligns with business priorities. For Canadian firms—particularly in mining services, engineering, water management, electrification and decarbonization—the opportunities are significant. The primary domestic risk is renewed social unrest or labour activism if austerity measures, conservative social positions or security policies are viewed as overreach.

In a small, open and investment-dependent economy, there are limits to ideological policy-making. As the Chilean proverb goes, Ir contra la corriente, casi nunca es conveniente—going against the current is almost never convenient. Social licence and policy execution will shape project timelines, financing costs and overall viability.

The bottom line: Outlook for Canadian companies operating in Chile

Chile under President Kast is unlikely to abandon its rules-based model. Instead, the test will be whether that model can once again deliver results while renewing public legitimacy. Chile should remain one of Latin America’s most attractive commercial environments, with medium-term growth risks tilted to the upside.

For Canadian firms, the opportunity is real—but timelines will be set as much in communities and courts as in cabinet rooms. EDC’s on-the-ground presence, financial solutions and market intelligence can help investors and exporters capture Chile’s solid growth potential.

This week, special thanks to Daniel Benatuil, senior country risk analyst for Latin America.

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