MercoPress. South Atlantic News Agency

Lack of gas plunges economic activity in Punta Arenas 22.2%

Argentina's natural gas supply restrictions to the Chilean extreme south region of Magallanes forced a drastic collapse of economic activity and exports, during the third quarter according to official data from the Santiago Statistics Office, INE.

Economy activity plunged 22.2% and exports 41.6% compared to the same period a year ago, making Magallanes the worst performer of the whole country and since 1996 when records begun to be collected. INE regional director Gabriel Parada said that the July-September suffered the full impact of the decrease in methanol production because of Argentina's gas supply restrictions. Canadian Methanex, one of the world's leading companies with a plant in the outskirts of Punta Arenas was forced to operate with only one of its four sections. However even if Methanex and its dismal production are not considered, Magallanes economic activity equally dropped 0.7% which comes as a shock to the region that was one of the fastest growing and with the lowest unemployment in Chile. Antofagasta in the northern extreme of Chile expanded 16.5%. In the first nine months of 2007, economic activity in Magallanes has contracted 7.6% and if methanol is not computed, the result is a positive 4.1% which is also below the national average for Chile. According to Parada four were the main reasons for the poor performance. First and above all, the methanol factor and overall manufacturing, down 16.3%; this was followed by retailing, more specifically the free zone of Punta Arenas which experienced a considerable drop in accounted sales because of fiscal and other deadlines, with a negative index of 14.7%; financial services contracted 9.2% as a consequence of the poor performance of retailing, manufacturing and farming; finally mining also receded 13.2% with lower output of coal, lime and oil and gas. But Parada pointed out that in spite of the collapse, employment remained strong, almost full employment, because of greater activity in personal and social services. The region's exports for the third quarter dropped 102.5 million US dollars compared to the same period a year ago. Punta Arenas Production and Commerce Confederation expressed concerns with the situation pointing out that "almost a quarter of the region's output was lost in a quarter". "If we want to at least have a similar growth to last year, 4.8%, this means the economy would have to expand 44.4% in the last quarter, which merits no comments", said Arturo Storaker, president of the CPC. Storaker called on the central government to send strong specific signals to the region, particularly in areas such as "salmon farming and tourism" and insisted that the Santiago sponsored slogan, "Punta Arenas, gateway to Antarctica" still has to be put into practice with investments to help the port become a first class provision post for scientific vessels and cruise ships. "This is pending, and we need it more than ever and now", underlined Storaker. However local government officials in Punta Arenas pointed out that special legislation regarding fiscal benefits for investments and financial support for contracting labor in Magallanes had been extended for another three years. But Storaker described the extension as a "patch" since the region was asking for at least another ten years. He also recalled that the original idea of the Santiago government was to eliminate them and this was stopped thanks to the strong lobbying from the Magallanes elected legislators sitting in the Chilean Congress.