Chile urged to update regulations to reap benefits from infra investments

After experiencing a decade of sluggish growth, Chile’s economy could get a boost from modernized regulatory frameworks that help dynamize infrastructure investments.

“The boost from infrastructure was an important part of Chile’s success in the 1990s, although at that moment we had very different demand,” former central bank president José de Gregorio told BNamericas after an economic outlook seminar hosted by Pontificia Universidad Católica’s economic and social policy center (Clapes UC).

In its latest monetary policy report, the central bank estimates that GDP grew 2.3% in 2024, after registering no growth in 2023. But annual growth averaged 4.8% between 2004 and 2013, also fueled by the commodities boom.

“One thing that we know about the economy is that, from a fiscal point of view, investment is the best expenditure to reactivate [growth], and infrastructure mobilizes a lot of investment,” De Gregorio, who also served as economy minister, said.

Although Chile’s concessions system has seen a revival, with tenders involving over US$5bn in the last two years, complaints about regulatory roadblocks that slow down investment abound.

“We need to adapt our institutional framework to make it a bit more modern, so that these investments can work within the rules, but more quickly and with more certainty,” De Gregorio said.

Congress is currently debating bills to speed up permitting that the government presented last year.

Inflation

Following a depreciation of the peso by nearly 5% against the US dollar in the last month, concerns have been raised about the effect on inflation and interest rate cuts.

Current central bank president Rossana Costa told the event that inflation is expected to increase to 5% during the first half but recede and get closer to the bank’s 3% goal in early 2026.

Inflation for full 2024 is estimated to have reached 4.8%.