"Y aunque los vientos de la vida soplen fuerte, soy como el junco que se doble, pero siempre sigue en pie" sang the Dúo Dinámico (and several others, in their own versions), in their popular song "Resistiré", from 1988. You don't have to be a musical expert to understand its meaning and why it has been used as an anthem on several difficult occasions.

Our country is facing a difficult situation today. The pandemic, the social crisis and the economic crisis have hit hard. Last year, GDP fell by just under 6%, more than one million people lost their jobs and around 300,000 companies stopped reporting sales. The mobility restrictions affected a large part of our daily lives and getting used to them was not easy. Personally, I am one of the privileged ones who was able to continue working from home, but with two preschoolers who required attention, a mental health that is beginning to suffer from the confinement and university students who had a hard time keeping their attention in the online mode, staying productive was not easy.

Do you remember that, at the beginning of all this, it was envisioned that from the third quarter onwards things were going to start to return to normal? Well, that is also affecting, because many temporary solutions that were implemented were not necessarily designed to be permanent. So, each time the conjuncture looked worse and the quarantines became more extensive, the economic situation worsened, with all the costs that that entails. Thus, for 2021, a first half of the year was planned to be still complicated, but with a trajectory that would not make us repeat the most difficult moments of 2020. However, in mid-May, with the exception of some communes in the Metropolitan region and others in the regions, the country is still in a restrictive mode, even worse than at the same time last year.

In this context, the Imacec[1] for March 2021 grew 6.4% with respect to the same period of the previous year, which was above market expectations. This might seem a lot, especially considering the most recent data, but it is precisely this weakness that explains this result. The low base of comparison that 2020 represents would be, in part, "to blame" for the high growth records we are likely to see over the next few months. However, let's not stop there. What is really important is that, in a month as complex as March 2021 was, activity, removing seasonal and calendar effects, only contracted 1.6% with respect to February. Do you know how much that variation was last year? -6,0%. We have adapted.

Along the same lines, in the last IPoM of the Central Bank, I learned that two out of three companies that stopped reporting sales have started to do so again. But that is not all. As of December, more than 110 thousand new companies had been created, making that, on net, during a year marked by the social outbreak and pandemic, there are 20 thousand more companies operating in the country. You are probably wondering if this creation, in value, is similar to the one that existed previously. Well, the 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 what companies had, on average, during the past years (about 3 workers per firm, which rises to 7 if we take those that start with 3 or more workers).

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

We resist.

Nathan Pincheira

Chief Economist of Fynsa

[1] Monthly economic activity index