September 30, 2023
Colombian economy

Colombian Industry Resilient as Oil Prices Plummet; World Bank Hails Policies

Unlike its floundering, oil-dependent neighbors in “socialist” Venezuela and Ecuador, Colombia’s capitalist economy and industrial output are showing resilience, as indicated by the latest Departamento Administrativo Nacional de Estadística (DANE) statistical survey.

The monthly survey released January 18 shows that factory output in Colombia rose 4.8% year-on-year in November 2015, while industrial employment and total industrial production both rose 0.7% year-on-year.

“Of the 39 industrial activities represented by the survey, 26 recorded positive variations in actual production,” according to DANE.

Thanks to the restart of Ecopetrol’s newly rebuilt, 160,000 barrels/day “Reficar” oil refinery at Cartagena, oil refining and fuels production rose 17.4 % year-on-year.

Colombia’s manufacture of beverages rose 6.6%, while production of pharmaceuticals and medical chemicals jumped 11.1%, according to DANE.

While 26 of the 39 national industrial sectors showed increased output year-on-year, among the 13 subsectors that showed declines were iron-and-steel (down 12.9% year-on-year); transport equipment (down 15.3%) and electric equipment/appliances (down 7.8%), according to DANE.

World Bank Praise

Meanwhile, World Bank president Jim Yong Kim announced January 15 that Colombia’s predominantly free-market macroeconomic policies have enabled economic resilience — in sharp contrast to Colombia’s oil-dependent, anti-free-market neighbors.

According to a press statement from Colombia’s Finance Minister Mauricio Cardenas, Kim emphasized that “now that oil prices are below US$30 per barrel, Colombia is better prepared to face the current economic environment than any other oil producer.”

Kim also cited “successful macroeconomic management” by the Finance Ministry. “We have great faith in [Minister Cardenas’] leadership” whereas “this is not the case elsewhere in the world,” Kim said.

“Colombia is the seventh largest World Bank client,” Minister Cardenas added. “We have a portfolio of more than US$8 billion [in World Bank loans] in areas such as education, agriculture, education, environment, and we have a relationship that is not only measured in money but also in knowledge, because they help us improve our [macroeconomic] practices.”

According to a related January 18 report from Colombian newspaper El Tiempo, Minister Cardenas was quoted as saying that Colombian industrial output would continue to improve in 2016 versus 2015, despite falling oil prices. Oil revenues account for about 20% of the Colombia government’s tax revenues, in contrast to the more-than-90% of total government revenues that come from oil sales in “socialist” Venezuela.

Colombia’s  Minister of Commerce, Industry and Tourism Cecilia Alvarez-Correa added that Colombia has now experienced six consecutive months of industrial growth, even in the face of global economic turmoil.

While the depreciation of the Colombian peso versus the US dollar over the past year has hurt local manufacturers that import certain raw materials or depend heavily upon dollar-denominated loans, other Colombian manufacturers that mainly tap local materials and local finance have in many cases seen their profits soar (see “Stronger U.S. Dollar: Opportunities for Colombia Business, Real Estate,” Medellin Herald, August 13, 2015).

The impending launch of massive “fourth generation” (4G) highway construction projects throughout Colombia also will boost industrial output, economic growth and employment ((see: “Antioquia, Medellin to See Huge Economic Boost from Infrastructure Projects,” Medellin Herald, November, 05 2015).

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