MercoPress. South Atlantic News Agency

Extreme south of Chile prepared to weather global crisis

Magallanes Region in the extreme south of Chile seems prepared to endure the effects of the coming global recession according to a report published Sunday by the country's main daily in Santiago, El Mercurio.

The report points out that the petrochemical industry and heavy investments in government public works have been a strong dynamo for the regional economy that anyhow at national level is insignificant: 1.7% of Chile's GDP. The energy crisis, particularly Argentina's decision to cut the provision of natural gas for the huge methanol complex in Punta Arenas had a devastating effect during the second quarter of this year when the Magallanes activity index fell 20%. However by the third quarter it recovered and was back 4.7% positive. "We believe that during 2009 our operation in Chile will continue to be restricted, a very challenging period", admits Paul Schiodtz Methanex vice- president for Latinamerica. But the exploration and exploitation of natural gas in the region, particularly in Tierra del Fuego is described as very encouraging. Several international corporations have signed agreements with the Chilean government to explore and produce natural gas and oil in the region, "which should help overcome the methanol shortage situation generated by Argentina's domestic market priority policy". Another important area which is preparing for the bad time is real estate, with values going down, --a global tendency--, and credit restrictions. Regarding tourism there's expectation about the season although the real concern is 2009/2010. But Magallanes has several important investment projects in the pipeline: maritime transport, salmon farming and coal mining. The overall prospect, contrary to other regions highly dependent on copper mining and refining, Chile's main exports, can be considered acceptable, says El Mercurio. Magallanes also remains Chile's region with the lowest unemployment, 1.8%.