Chile’s economy stagnated in mid-2025, before José Antonio Kast’s government took office. That is the assessment in consulting firm Gemines’ monthly report, according to Diario Financiero. Its general manager, Tomás Izquierdo, elaborated on the report in an interview with Señal DF.
Izquierdo argues that the government’s initial crisis rhetoric did not directly hurt activity. It did damage expectations, meaning what households and businesses believe will happen, which guides how much they spend or invest. The interview’s headline sums up his criticism: in his view, Finance Minister Jorge Quiroz "never imagined that the economy would lose steam as quickly as it did".
The economist explains that, using seasonally adjusted figures (adjusted to remove effects such as holidays or seasonal patterns), the economy stopped growing quarter to quarter in the middle of last year. On the supply side, this year’s activity is being weighed down by falling catches of pelagic fish, such as anchoveta and jack mackerel, and above all by a sharp decline in mining. On the demand side, he sees "good reasons" for growth close to zero this year.
Consumption, he says, faces a structural problem: a labor market weakened by regulation that made labor much more expensive very quickly. According to Izquierdo, hiring became about 25% more expensive in real terms over three years, slowing recruitment and pushing up already high unemployment. If you fear losing your job, you spend less. That caution among families acts, in his words, as "a kind of self-fulfilling prophecy".
Investment faces another brake: the promise of regulatory changes announced far in advance. When a company or family knows the rules will change, but not when, it postpones its decision. That happens with investment projects and home purchases alike. Even so, Izquierdo does not directly blame the government, because every bill creates uncertainty and the legislative process is always lengthy.
When ranking the causes of this year’s poor performance, he puts the external factor first: the surprise attack on Iran on February 28, led by US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu. Without that event, he believes the year "would probably have been considerably better". Second comes the previous government’s labor legacy. Third is the current administration’s rhetoric about a "bankrupt state", which he calls "an error in management, an error in messaging".
Izquierdo also criticized the Central Bank. In his view, since the inflation spike caused by pension fund withdrawals, the bank’s communications policy and actions have been "very erratic", only making the adjustment more costly.
On fuel, he backed Quiroz. Mepco (Fuel Price Stabilization Mechanism) cushions gasoline price increases with public funds. Izquierdo says that if the conflict in Iran had lasted one or two months, using it would have made sense. But with a crisis now lasting about eight months, the fiscal cost of that subsidy "would have been enormous". The key to reviving activity, he concludes, is to improve the country’s productivity.
