On 11 March, José Antonio Kast was inaugurated as Chile’s President for the 2026-2030 term. As the country’s democracy is firm and its institutions stable, the transition was relatively smooth and constitutionally unremarkable. Politically and economically, however, the change represents a stark shift in ideological direction.
Between the now-concluded government of former President Gabriel Boric and Kast’s incoming administration, Chile has moved from the most left-wing administration in its recent democratic history to its most right-wing. This radical shift raises questions around the potential effects of the administration’s changed objectives on the long-term planning needs of investors – both domestic and foreign.
A polarised political climate, with a parliament led by its least centrist factions, will inevitably reduce the appearance of stability and is more likely to result in legislative deadlock. However, analysis of the Boric administration and initial signs from the Kast administration show that there remain a wide variety of shared strategic goals, which are expected to be dealt with from a more long-term, objectives-driven standpoint. With the right market analysis and risk insights, these areas could offer considerable and reliable economic opportunities to potential private sector partners.
The revision of ‘permisología’
A fixture of Chile’s 2025 presidential campaign was the debate – or in some sense the lack thereof – around the country’s slow, burdensome and unclear regulatory environment.
Chile’s regulatory frameworks lag behind developments in environmental, indigenous and social justice legislation - leaving private companies with little clarity or opportunities for procedural fast-tracks. The lack of dedicated legal frameworks in areas such as desalination and renewable energy projects, generates uncertainty and locks companies into a near-constant hunt for regulatory approval (‘permisos’). Nonetheless, these complaints around ‘permisología’ – a made-up term used to describe the country’s overregulation – were acknowledged by all major candidates in the election, irrespective of their wider political leanings, and each presented plans to reduce and/or simplify the labyrinthine regulatory processes currently in place.
Although Kast’s administration, which contains libertarian elements, proposes some of the most pronounced forms of economic deregulation suggested during the election, the principle that the system must change is understood across parliamentary groups. As such, Kast’s most maximalist proposals may be watered down by Congress, but the 2026-2030 legislative period in Chile’s parliament still promises to be a major step forward for ease of investment in the country.
Some of the industries most likely to benefit from streamlined reforms include Chile’s renewables, data centre and desalination projects as well the expansions of existing mining operations to capitalise on the growing global demand for lithium and copper.
From our regional offices, the view is exciting. Our country experts have continuously supported clients with conducting market entries or finding local partners in shifting economic and regulatory environments. As the green energy and lithium industries grow, we expect that regulation-related business intelligence will be a crucial element of any business’ market and project analysis processes.
Difficult financial period, but a strong private sector
Since the social unrest of 2019 (dubbed the ‘estallido social’) and the COVID-19 pandemic immediately thereafter, government finances have been under strain.
On the political left, Boric was a former student leader elected under the promise of transformational and expensive economic reforms, including better pensions, student loan forgiveness and extensive healthcare reform. Any one of these three flagship policies would have been highly financially ambitious in a standard political campaign cycle; to promote all three simultaneously therefore comes with an unprecedented price tag.
Kast, for his part, represents the opposite end of the Chilean political fringes but is no less fiscally ambitious with his promises. His coalition’s right-wing, more libertarian approach centres on an unprecedented budgetary plan that involves USD 6bn in as-yet unfunded and undetailed cuts to public spending (equivalent to around 7% of total spending in 2025). Given the importance of public spending, such cuts could pose challenges for investors and businesses, including social stability.
Kast repeatedly criticised the high unemployment rates (of around 8-9%) seen during Boric’s mandate, but torpedoing government spending on the scale he proposes would significantly reduce overall economic activity and, in turn, risk raising unemployment even further. A larger number of unemployed adults is then likely to fuel social unrest which – as shown by the 2019 protests – can cause significant economic harm.
Lessons from the Boric administration, however, showed that the government ultimately adhered to certain fiscal limits and was unable to deliver several of its most expensive promises. Chilean fiscal institutionality has proven resilient in the face of heightened public spending demands, and Kast’s unfunded cuts are likewise expected to be watered down considerably.
Importantly, despite the loud public spending shifts, the Chilean private sector remains strong. Chile’s conglomerates, including Falabella, LATAM Airlines and Sigdo Koppers, remain steady and their international assets are likely to help them weather this public sector financial strain relatively easily. The mining sector in particular, led by Chilean firms SQM and Antofagasta Minerals, is expected to continue its growth - the industry has already attracted the highest levels of investment in over a decade as lithium demand increases.
These crucial insights, which separate political chatter from on-the-ground developments, are a key tool in the investor’s toolkit. They are therefore the ultimate objective of any business intelligence and jurisdictional analysis research and will surely inform our clients’ needs in future.
Military industrial advances
Alongside our local expertise, Control Risks has been at the forefront of analysing recent global geopolitical trends, as seen in our previous articles on the dynamics of the US intervention in Venezuela and Europe’s refocused security priorities.
In Chile, the growing multipolarity of international relations and the heightened sense of insecurity has further strengthened a longstanding national interest in military-industrial autonomy. For the Boric administration, such autonomy was a crucial strategic objective, and Kast’s government – which has strongly pushed for more security and defence-related advances – is expected to continue this trend. For businesses, therefore, the key takeaway is that large swathes of Chilean economic planning will remain stable.
In the last year alone, Chile has opened a new National Space Centre for autonomous production of satellites, launched its first home-built icebreaker ship and doubled its production capacity for small arms and munitions with a view towards competing in international arms sales. Each of these milestones is a ‘first step’ in their respective defence production areas and each of them will therefore seek private partners – domestic and foreign – to support their strategic objectives.
For investors, the Boric administration has established a National Policy of Continuous Naval Construction with a view to securing long-term financing – both public and private – for an entirely home-built navy. Following the launch of the Almirante Viel icebreaker, the country’s shipyards have begun autonomous construction of frigates and other warships. For a country that had previously bought all its navy vessels from abroad, the changes have been rapid and monumental.
To achieve this military-industrial transformation, Chile has sought a variety of private partners including from Italy, Spain and France. As part of this process, the state is likely to put forward large purchase orders and public tenders for which it will seek partners both at home and abroad. Alongside this, as is the case with Spain’s Indra and Germany’s KNDS, it is likely that Santiago will aim to secure significant stakes in strategic industrial firms and projects. This means the state is likely to increase the number of joint ventures between its industrial companies (ASMAR, FAMAE, CORFO) and private partners.
For some businesses, these developments will mean exciting business opportunities in Chile, while for others they may mean a greater risk of exposure to the government’s politics and its military-industrial supply chain.