Employment And Industrial Production Both Down

Employment and industrial production both fell in June while Santiago housing sales rose, according to ecnomic data released this week. Despite some glimmers of hope, Chile’s economy, the figures indicate, continues to suffer the effects of the global financial crisis.

Chile’s National Statistics Institute (INE) reported Thursday that unemployment rose to 10.7 percent for the April-June period, the sixth consecutive three-month-period rise. The figure marks an increase of 0.5 percent over March-May figures and a 2.4 percent rise compared to the April-June 2008.

“The unemployment rate was in line with expectations for this winter period,” said the INE report. “Negative seasonality usually increases at this time of the year, independent of the economic cycle.”

The Society for Industrial Development (SOFOFA) also published data showing that industrial production in Chile fell by 14.2 percent in June compared to the same period in 2008. The fall represents the ninth consecutive monthly decrease in production, but is less severe than May’s slide. Analysts suspect the numbers could be a sign that Chile’s economy gradually beginning to recover.

The 14.2 percent decrease in industrial production has been largely attributed to a 32.1 percent fall in salmon production as a result of the ISA virus, which has killed off a large proportion of Chile’s valuable salmon stocks (ST, July 15). ISA, short for Infectious Salmon Anemia, was first detected in Chilean waters two years ago. The yet-to-be-contained outbreak has forced the closure of numerous salmon farms and some processing plants. Companies, as a result, have laid off as many as 15,000 workers.

Production of goods for construction also fell 19.2 percent in June, representing a decrease of 0.2 percent on May’s figures, but still the lowest fall since February 2008, SOFOFA reported. The group projects an overall fall of 8 percent in industrial production for the whole of 2009.

Copper production is down as well – by 2.6 percent so far this year, according to the INE. Even slight variations in copper production can cause major ripples in Chile’s economy. Chile is the world’s largest copper producer. The metal, furthermore, accounts for around half of all the country’s export earnings.

Many economists, nevertheless, say an end to the prolonged downturn may be nigh. One positive indicator that the Chilean economy may be getting back in its feet is a recent upsurge in Santiago home and apartment sales.

According to the Chilean Chamber of Construction (CCHC), sales of new residences in the capital rose 11 percent in the second quarter compared to the same three-month period last year. In total, 6,908 new homes and flats were sold, a 13 percent increase over the first quarter, the CCHC reported.

The bulk of those purchases (4,868) were apartments, sales of which rose 21.6 percent compared to the second quarter in 2008. Purchases of new homes actually fell slightly during the April-June period, from 2,222 in 2008 to 2,040 this year.

The Chamber’s president, Lorenzo Constans, thinks government housing subsidies, low interest rates and improved consumer confidence have all helped spur the turnaround. The slide, he told the daily La Tercera, has bottomed out, “although we’re still moving horizontally and we can’t go forward all that quickly.”

New construction, however, is way down as property owners are more interested at this point in unloading stock leftover from the pre-crisis building boom than risking new ventures. In June, construction began on just 467 new units, some 80 percent less than the 2,332 units for which building began the same month last year.

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The global financial crisis seems to be of little concern for the country’s largest energy provider, Endesa Chile, whose profits are soaring of late.

So far this year, the company’s profits are up a whopping 64 percent compared to the first half of 2008. The company pulled in US$623 million during the first six months of 2009, thanks in large part to a reduction in fuel costs. The company operates several thermoelectric (fossil fuel burning) generators, which have been far cheaper to run due to falling oil prices.

Mother Nature also lent a helping hand in recent months. Increased precipitation resulted in higher electricity production from Endesa Chile’s numerous hydroelectric dams. The company owns dams throughout central and southern Chile. Its largest is the 690-MW Ralco facility on Region VIII’s Biobio River.

Endesa Chile boasts an installed capacity of roughly 4,800 MW, which represents more than a third of the country’s overall electricity generation. Endesa Chile is part of Enersis, the South American arm of Italian-owned multinational Endesa, one of the world’s largest energy companies.

Enersis – thanks in large part to Endesa Chile – is also enjoying record profits this year. In the first six months of 2009, the holding company saw its profits leap by 46 percent to US$679 million.

Endesa Chile is hoping to control an even larger part of the nation’s energy market via a joint venture it began in 2006 with Colb?n, a Chilean entity. Colb?n is Chile’s third leading electricity provider with an installed capacity of approximately 2,500 MW.

Together the two companies are planning to build five massive dams along far southern Chile’s Baker and Pascua Rivers. The controversial project, which has been fiercely questioned by environmental groups, would alone add 2,750 MW to Chile’s central grid, or SIC.

Under the name HidroAys?n, the two companies submitted their plan to environmental authorities last August. Three months later, however, they withdrew the project after its environmental impact study was heavily criticized by both government agencies and citizens groups. HidroAys?n is expected to resubmit the multi-dam scheme later this year.

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SANTIAGO – Emissions of greenhouse gases from Chile’s mining industry increased 48 percent between 2004 and 2008 even though the production of copper, the South American country’s top export, fell about 2 percent during the period, the Chilean Copper Commission said.

The figures were included in a study prepared by commission engineer Sara Pimentel that was published Wednesday by the El Mercurio newspaper.

The increase in greenhouse gas emissions was due to the reduction in the flow of clean-burning natural gas from Argentina since 2004, a situation that forced Chilean utilities to increase the use of fuels that generate more of the emissions believed to cause global warming.

At the same time, a drop in the copper concentration of the extracted ore required the use of more energy to produce the same amount of the metal, leading to an 8 percent increase in energy consumption between 2006 and 2008.

Chile currently generates 3.8 tons of greenhouse gases for every ton of fine copper it produces.

About 24 percent of the industry’s total greenhouse gas emissions are due to mining, while the remainder come from indirect emissions related to the production of energy needed in operations.

Pimentel concluded that the mining industry’s CO2 emissions were more closely linked to the country’s energy policy and the fuel mix used by utilities than to what mining companies did.

Chile’s Sistema Interconectado del Norte Grande, which provides electricity to the main mining complexes, mostly operates thermoelectric power plants that burn oil or coal.

The Sistema Interconectado Central, however, generates 53 percent of its power from hydroelectric plants, producing nearly one-third less greenhouse gas emissions than the northern grid. EFE

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BUENOS AIRES – A homemade bomb exploded early Tuesday outside the headquarters of Chile’s Lan airlines in Buenos Aires, causing damage but no injuries, Argentine police and the company said.
No one has claimed responsibility for the attack.
“As a result of the incident, there was damage to the main entrance” and “one of the canopies” at the building, which is located in downtown Buenos Aires, Lan said in a statement.
Lan, which has offered short-haul flights in Argentina since 2005, said it was “providing full cooperation” to find out who carried out the attack and what their motive was.
The attack will be investigated by federal judge Ariel Lijo. EFE

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SANTIAGO – A stunt airplane with the Chilean air force crashed near Santiago on Monday, but the pilot – the plane’s only occupant – survived, according to preliminary reports.

The aircraft, an Extra 300 L with the air force’s “Falcons” team, crashed about 2:00 p.m. onto empty land to one side of the Panamericana Sur highway, some 15 kilometers (9 miles) south of downtown Santiago.

The pilot, Lt. Eduardo Varas de la Fuente, was found unconscious and pulled from the cockpit by volunteer firefighters, who were the first to arrive on the scene.

“He’s unconscious, but he was already taken in a helicopter to the (air force) hospital, fire Capt. Marcos Silva told Bio Bio radio.

Air force sources said that the plane was on a training flight when the accident occurred, and eyewitnesses said that the engine died while the plane was flying at low altitude but the pilot was able to maneuver it so that it crashed in a vacant area.

On Aug. 7, 2007, a plane of the same model crashed on a public road in San Bernardo, south of Santiago, hit three vehicles and burned, but the pilot and the three drivers were unhurt. EFE

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