"And even though the winds of life blow strong, I am like the reed that bends but always remains standing," sang the Dúo Dinámico (and several others, in their own versions) in their popular 1988 song "Resistiré." You don't have to be a music expert to understand its meaning and why it has been used as an anthem on several difficult occasions.

Our country is currently facing a difficult situation. The pandemic, social crisis, and economic crisis have had a profound impact. Last year, GDP fell by just under 6%, more than a million people lost their jobs, and around 300,000 companies stopped reporting sales. Mobility restrictions affected much of our daily lives, and getting used to them was not easy. Personally, I am one of the privileged few who was able to continue working from home, but with two preschoolers who needed attention, mental health issues that were beginning to take their toll due to confinement, and university students who had difficulty staying focused in an online setting, staying productive was not easy.

Remember how, at the beginning of all this, it was predicted that things would start to return to normal from the third quarter onwards? Well, that is also having an impact, because many of the temporary solutions that were implemented were not necessarily designed to be permanent. Thus, every time the situation looked worse and quarantines became more widespread, the economic situation worsened, with all the costs that this entails. As a result, for 2021, the first half of the year was expected to remain difficult, but with a trajectory that would not repeat the most difficult moments of 2020. However, in mid-May, with the exception of a few municipalities in the Metropolitan Region and others in other regions, the country remains in restrictive mode, even worse than at the same time last year.

In this context, the Imacec[1] for March 2021 grew 6.4% compared to the same period last year, which was above market expectations. This may seem like a lot, especially considering the most recent data, but it is precisely this weakness that explains this result. The low basis of comparison represented by 2020 would be, in part, "responsible" for the high growth rates that we are likely to see in the coming months. However, let's not dwell on that. What is really important is that, in a month as complex as March 2021, activity, excluding seasonal and calendar effects, only contracted by 1.6% compared to February. Do you know what that variation was last year? -6.0%. We have adapted.

Along the same lines, in the Central Bank's latest IPoM, I learned that two out of three companies that stopped reporting sales have resumed doing so. But that's not all. By December, more than 110,000 new companies had been created, meaning that, on balance, during a year marked by social unrest and the pandemic, there are 20,000 more companies operating in the country. You are probably wondering if this creation, in terms of value, is similar to what existed previously. Well, inter-company connections (a way of measuring the number of businesses) returned to pre-pandemic values. In terms of hiring, we see numbers very similar to those that companies had, on average, in previous years (about three workers per firm, which rises to seven if we take into account those that start with three or more workers).

It is for these reasons that, despite the fact that the pandemic is not over and that we will probably have to live with it for some time to come, at Fynsa we have an upward bias in our growth forecast for 2021 (6.5%). We adapt, we move forward, we innovate, we learn to do things differently.

We resist.

Nathan Pincheira

Chief Economist at Fynsa

[1] Monthly economic activity index