Chile’s economy could end 2026 stagnant or even contracting, and El Niño is adding pressure to that outlook, according to Emol. At the start of the year, forecasts pointed to growth of around 3%. Most estimates are now below 1%.
The impact of the weather is already being felt in Santiago. The mudslide in San Carlos de Apoquindo, in Las Condes, and the rain, hail and wind gusts that followed damaged homes, vehicles, streets and businesses. They also caused flooding, power outages and disruptions to public transport.
The Chilean Insurers Association estimates combined losses at around US$200 million. Earlier, consultancy Inciti had preliminarily estimated damage to buildings in Las Condes alone at US$172.8 million. The association warned that the figure could rise as those affected file claims with insurers.
To understand the deterioration, it helps to look at how forecasts have changed. The International Monetary Fund (IMF) lowered its estimate for Chile from 2.4% to 0.6%. The Central Bank put its forecast in a range of 0.25% to 0.75% in its September Monetary Policy Report (IPoM). The Ministry of Finance projects 0.7% and the World Bank, 0.8%.
The market is even more pessimistic. The Central Bank’s Economic Expectations Survey, which polls economists and analysts, put expected growth at just 0.2%.
The figure that raised alarm was August’s Imacec, the monthly indicator that serves as an early gauge of GDP (Gross Domestic Product, the value of everything the country produces). It fell 1% year on year, dragged down by a 17.4% plunge in mining. After that figure, Scotiabank considered it "highly likely" that GDP would end the year in negative territory, between -0.5% and 0%. Goldman Sachs lowered its estimate from 0.6% to 0.3%.
In other words, the economy was already weakening before the storms, with weak domestic demand and employment problems. The weather is worsening an existing situation.
Warnings about El Niño, the unusual warming of the Pacific Ocean that alters rainfall in South America, increased during the year. In June, the Central Bank estimated the probability of an extreme episode toward the end of the year at around 30%. In September, the Economic Commission for Latin America and the Caribbean (ECLAC), citing the US climate agency NOAA, raised the probability of a "Super El Niño" to 75% between October and December.
Which sectors suffer? Such an event can disrupt agricultural, fishing and industrial production, interrupt operations and affect exports. It also forces companies to spend on repairs instead of investing in growth. It is like a family that had savings to extend its house and ends up using them to fix the roof.
According to ECLAC, drawing on Central Bank analysis, an extreme El Niño could shave around 0.5 percentage points off Chilean growth. With forecasts already hovering around 0.5%, that reduction is enough to leave GDP growth near or below zero.
Chile would not be the hardest hit in the region. Estimates cited by ECLAC point to a reduction of 4.4 percentage points for Ecuador, 4.1 for Peru and 0.9 for Colombia. For Latin America and the Caribbean, the organization projects a cumulative loss equivalent to 2% of GDP over three years, concentrated mainly in the first.
The open question is how much further economic activity will suffer over the rest of the year and what effects will carry over into 2027. The period of greatest climate risk, according to ECLAC, extends through December.
