Chile's Political Shift to the Right and Its Impact on Foreign Investment and Migration Policies

Chile's political landscape has undergone a dramatic transformation in the wake of the November 2025 general elections, with the right-wing candidate José Antonio Kast emerging as a strong contender in the presidential runoff. This shift, driven by widespread dissatisfaction with economic stagnation, rising crime, and migration pressures, has profound implications for foreign investment and migration policy. For investors, the transition raises critical questions about the balance between pro-market reforms and the risks of political fragmentation, while migration crackdowns could reshape labor markets and social dynamics.

A Rightward Realignment and Its Economic Implications

The election results reflect a decisive rejection of the center-left Boric administration's policies, with right-wing candidates securing over 70% of the first-round presidential vote. Kast's platform, centered on fiscal discipline, deregulation, and tax cuts, aligns with Chile's historical neoliberal legacy but introduces new uncertainties. His "Takeoff" economic plan proposes a $6 billion reduction in public spending, aiming to stimulate growth through private investment. Such measures could attract foreign capital, particularly in mining and energy sectors, where Chile's copper and lithium reserves remain globally strategic. However, the success of these reforms hinges on Kast's ability to secure a legislative majority, as the Change for Chile coalition (CpCh) holds a majority in the Chamber of Deputies. Without legislative support, policy implementation risks gridlock, undermining investor confidence.

Historically, Chile's right-wing governments in the 2000s achieved robust growth through trade liberalization and privatization, reducing poverty from 45% to 8% between 1982 and 2014. Yet, this period also saw persistent inequality and social polarization. The current economic climate, marked by an 8.9% unemployment rate and a projected 2.4% GDP growth in 2025, suggests that Kast's pro-business agenda could revive investor enthusiasm-if executed effectively. The OECD has noted that Chile's membership in the CPTPP and its low U.S. tariffs provide a favorable backdrop for export-driven growth, though external risks such as China's slowing demand for commodities and El Niño-related disruptions remain.

Migration Policy and Its Dual Impact

Migration has become a defining issue in Chile's political discourse, with both Kast and Jara adopting hardline stances to appeal to a electorate increasingly concerned about crime and resource strain. Kast's proposals-border fortifications, mass deportations, and new detention facilities-contrast sharply with the Boric administration's more inclusive approach according to election analysis. While such measures may address public anxieties, they risk alienating sectors reliant on migrant labor, particularly in agriculture and construction. According to a 2025 survey, 37% of Chileans attribute rising unemployment to immigration, highlighting the political sensitivity of this issue.

For foreign investors, stricter migration controls could have mixed effects. On one hand, reduced competition for local labor might ease wage pressures in certain industries. On the other, sectors dependent on migrant workers-such as agriculture and domestic services-could face labor shortages, increasing operational costs. Additionally, deportations may strain public services, potentially deterring investment in urban areas where migrants congregate. The challenge for Kast will be to balance these competing interests without triggering social unrest or damaging Chile's reputation as a stable investment destination.

Historical Context and Investor Sentiment

Chile's economic performance under right-wing governments has historically been marked by stability and growth, albeit with uneven social outcomes. The 1990s saw an average GDP growth rate of 6.9% and a dramatic reduction in inflation, while the 2000s witnessed FDI inflows surge, driven by mining and financial services. However, the post-2014 slowdown-attributed to falling copper prices and structural reforms-has raised concerns about the sustainability of Chile's economic model.

Current investor sentiment reflects this duality. While Chilean bonds have priced in expectations of institutional stability, concerns persist about the government's capacity to deliver on its promises. The permitting processes for mining and energy projects, though streamlined via initiatives like the Unified System for Permits (SUPER), remain lengthy and politically sensitive according to U.S. investment reports. For foreign investors, the key question is whether Kast's administration can replicate the successes of the 2000s while addressing contemporary challenges like climate change and technological disruption.

Conclusion: Navigating the New Normal

Chile's political shift to the right presents both opportunities and risks for foreign investors. Pro-market reforms could reinvigorate growth in mining and technology sectors, while migration crackdowns may reshape labor markets and social dynamics. However, the success of these policies depends on Kast's ability to navigate legislative challenges and external economic headwinds. Investors must remain vigilant, balancing optimism about Chile's long-term potential with caution regarding short-term uncertainties. As the December 14 runoff approaches, the world watches to see whether Chile will embrace a new era of right-wing governance or return to a more centrist path under Jara.