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Monthly Snapshots - May 2021: Chile Edition

Good news for starting the second trimester of 2021.

The International Monetary Fund (IMF) announced an increase in Chile’s gross domestic product (GDP) forecast to 6.5%, according to the agency estimates, from 4.5% in October 2020. It is the fourth time this year that the IMF increases its estimate. The change was mainly explained by the gradual fading effects of the pandemic as mobility restrictions are relaxed, and the Government continues to provide fiscal stimuli. All of this on top of a steady progress of vaccination.

The IMF also highlighted that, although the Government had to tighten mobility restrictions at the end of March due to the increase in Covid-19 infections, it also expanded existing fiscal measures to mitigate its impact, while the vaccination process advances quickly.

"The Government adopted a comprehensive and well-planned set of fiscal, monetary and financial policy measures to alleviate the effects of the pandemic," the IMF highlights. However, it is important to avoid pension withdrawals, as it weakens the pension. The government should provide targeted fiscal measures that carry out a comprehensive reform of the health and retirement fund system, recommends the IMF.

In addition, the IMF noted that to promote productivity and inclusion "it will also be crucial to improve the quality of education and financial integration, reduce inefficiencies and informality in the labor market, promote trade integration and respond to climate change."

Patagon Valley and the hydrogen development

Large international companies and pioneers in technology are expanding their plans in South American countries, seeking to supply and innovate their satellite internet projects in the continent.

Starlink, Elon Musk's satellite internet project seeks to create a global network of high-speed broadband internet to places where access has been difficult, expensive, or absent. It currently has a constellation of 1000 units,completing its last launch on January 20 with the deployment of 60 satellites. Elon Musk affirmed that his first steps in South America will be officially established in Argentina and Chile, giving way to Mexico, Brazil, and Colombia. As for Chile, the arrival of Starlink is more advanced: the US company initiated the procedures before the regulatory agency for the construction of 7 ground stations. One will be in Santiago and the other six will be situated, in the south of the country.

On the other hand, Amazon (Amazon Web Service) will install satellite stations in Punta Arenas and will be a neighbor of SpaceX. In the Cabo Negro sector, the multinational company intends to initially install eight satellite ground stations, also known as AWS Ground Station. These are antennas that allow a more efficient connection for sending and receiving data, due to their proximity to satellites that orbit the earth. Thus, the place stands as a kind of astronomical information highway. After a millionaire purchase in Chile. The American acquired a piece of land in the extreme south of the country, in a negotiation process that lasted for two years, under absolute reserve.

These multinationals have decided to establish themselves in the Ssouth of Chile, where they have begun to call this place “Patagon Valley”, technological simile with Silicon Valley, and even more so after the Green Hydrogen boom.

This territory has imposing wind turbines that, since October 2021, make up the “Vientos Patagónicos” wind farm, a project by Enap and Pecket Energy that emerges as an unequivocal example of what Magallanes can mean in the production of non-conventional renewable energies.

It was precisely the same month as the park's inauguration when Highly Innovative Fuels, known by its acronym HIF, confirmed its project to build the first green hydrogen pilot plant in Cabo Negro, with German financing through Siemens Energy.

The complex, which is expected to be ready by the end of this year, will be the largest of its kind in Latin America and one of the first in the world, which will use renewable energy and carbon dioxide captured from the atmosphere to produce 350 tons of methanol per year and 130,000 liters of e-fuel from 2022. The project projects an initial investment of US $ 38 million. And that, they say, only promises to be the starting point.

Chilecon Valley

Despite its geographic isolation, Chile has proven to be a hub for startups with great potential, earning the name "Valle de Chilecon" in the process.

CornerShop, Notco and Fintual are some of the best known and most successful startups in the continent. They have achieved great success in recent times and currently there is an interesting wave of new startups creating very competitive solutions in different industries.

Why are these companies relevant to the world?

These startups have encouraged business innovation in the region with their agile and technological methodologies, providing a quick option for large companies to create or pilot solutions through linking with them.

Without going any further, according to the IEAE Business School and Wayra - Movistar's innovation unit - and with the support of CORFO, 24% of the largest Chilean companies (with a turnover of over US $ 4 billion a year) link with startups or innovative ventures.

According to Pablo Tirado from El Mercurio newspaper, there are also over 1,000 startups in Chile vying for international investments. While Chile still doesn’t have a unicorn, don’t let that dissuade you. There are four “Centaur” companies worth more than US$100 million and 31 “Little Ponies” worth more than US$10 million.

Women in the ecosystem

Over the years, Chile has also developed new programs to integrate women into the startup ecosystem. According to GEM, 42% of women make up the entrepreneurial activity in the initial stages. In addition, women run 44 percent of the companies established in Chile.

Creating awareness and encouraging women to start a career or boost their current one is something that organizations like Girls in Tech Chile are currently working on. Similarly, there are startup programs specifically meant for female entrepreneurs.

Fintech in Chile

Since now 72% of Chileans have internet access, and this percentage continues to rise, the number of digital banking, payment, and remittance applications is skyrocketing.

Chile's fintech startup ecosystem has gained relevance in recent years. From June 2016 to June 2019, there has been growth of 114%.

Another interesting aspect to highlight is that the Chilean fintech ecosystem has become one of the most mature in the South American region. This is because 69% of these fintechs have more than 3 years of operation, reflecting a low mortality rate of 12%. The survival of the majority of Chilean fintechs is a good sign for investors, and at the same time, it explains why 91% of them are preparing to expand their operations in the region.

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