MercoPress. South Atlantic News Agency

Methanol Magallanes is second fastest growing region

The extreme regions of Chile had the most dynamic economies during the second quarter of the year, reports the Chilean Statistics Institute, INE.

The First Region in the extreme north experienced a 13.5% economic expansion, following on a very encouraging first quarter. Mining, construction and retailing were crucial for the percentage.

INE reports that during the first half of the year 2006, none of the twelve Chilean regions experienced negative growth in spite of the fact that manufacturing and fisheries had a poor performance particularly in those areas highly dependent on these sectors.

Second best was Magallanes Region in the extreme south which under the influence of the methanol complex next to Punta Arenas managed to grow 10.3%. If methanol is excluded the overall expansion of the region would have been limited to 4.2%, below the Chilean average above 5%.

The most dynamic sectors of the Magallanes economy were industry and retailing, while those with the largest negative impact, construction and fisheries. At the other end of the ranking figure the regions of Los Lagos and Maule with 2.4% and 3.2%, the lowest growth in the whole country. To make things worse both regions have been declining since the third quarter of 2005.

Meantime Chile's Finance Minister Andrés Velasco announced that the 2007 budget contemplates a significant increase in social expenditure, "which we estimate in one percentage point of GDP".

However this will be tightly linked to "mining costs and fiscal revenue" because social expenditure "is long term and not transitory", and the issue must be addressed "responsibly".

Velasco also revealed that Chile's GDP tendency estimate for 2007 had been raised from 5 to 5.3%, but refused to speculate on copper prices. "The long term price of copper is quite different from what we are currently seeing in the markets and it's transitory", underlined Velasco.

Chile's government owned copper company Codelco reported profits of 4.6 billion US dollars in the first half of this year, double the same period in 2005. Codelco produced 853.000 tons of copper in the first half of 2006 compared to 813.000 in 2005.

The average price of copper during the first half of 2006 was 2.75 US dollars the lb compared to 1.51 US dollars in the same period a year ago.