Colombian economy 69
Colombia GDP Grew at 2.2% Rate in 1Q 2018: DANE
Tuesday, 15 May 2018 15:06 Written by Roberto Peckham
Colombia’s national statistics agency (Departamento Administrativo Nacional de Estadistica, DANE) announced May 15 that first quarter (1Q) gross domestic product (“PIB” in Spanish initials) grew by 2.2%, a big improvement over the 1.7% PIB growth in 1Q 2017.
The finance/insurance sector topped every other sector at 6.1% PIB growth, followed by 5.9% growth in public administration/defense; 5.6% growth in professional, technical and scientific activities; entertainment/recreation at 4%; wholesale/retail commerce at 3.9%; communications/information sector at 3.1%; and real-estate activity at 2.9% (see chart, above).
Explaining the decline in the construction sector, the sharpest drop was in residential/nonresidential building (down 9.2%), followed by an 8.2% drop in civil engineering and a 6.4% drop in highway/railroad construction, according to DANE.
The dip in the mining sector was blamed mainly on a 17.5% drop in metals mining. However, the oil-and-gas sector saw a slight (0.8%) increase in 1Q 2018 PIB.
The decline in industrial manufacturing was blamed mainly on a 4.6% drop in textile manufacturing and a 4.2% drop in finished metals production.
Over-all, Colombia’s economic output had a value of COP$210 trillion (US$73 billion) in 1Q 2018, up from COP$207.8 trillion (US$72 billion) in 1Q 2017 (as measured in constant 2015 Colombian pesos), according to DANE.
IMF Sees 2.7% GDP Growth in Colombia This Year
Monday, 30 April 2018 15:38 Written by Roberto Peckham
The International Monetary Fund (IMF) on April 30 announced that it foresees 2.7% growth in Colombia’s gross domestic product (GDP) this year.
In its latest annual “executive board” report (see: http://www.imf.org/en/News/Articles/2018/04/30/pr18154-imf-executive-board-concludes-2018-article-iv-consultation-with-colombia?cid=em-COM-123-36986), IMF found that during the 2017 calendar year, “adequate policy management brought Colombia near completion of its adjustment to large external shocks while further advancing inclusive growth.”
However, “economic growth moderated as private investment and consumption weakened in line with lower national income. Some delays in the infrastructure [development] agenda also contributed to the decline in private investment.”
On the other hand, “fiscal consolidation continued, guided by the fiscal rule and contributed to the narrowing of the current account deficit which was also buttressed by some recovery in oil and non-oil exports,” IMF found.
“Despite the growth moderation, social indicators improved with both poverty and income inequality decreasing in 2017.
“The current-account deficit declined to 3.4% of GDP and continued to be financed by FDI [foreign direct investment] to a large extent. Portfolio inflows moderated somewhat but remained ample with further increases in foreign participation in the local government debt market,” the organization added.
“Colombia’s outlook is favorable as continued efforts to advance the structural reforms will foster economic diversification and productivity growth. Economic growth is expected to rebound strongly in 2018 and further over the medium-term, led by strengthening investment and exports.
“The combined impact of the structural tax reform, a brighter outlook for oil prices and the authorities’ 4G [fourth-generation highway construction] infrastructure agenda will underpin investment while reducing Colombia’s relatively large infrastructure gap.
“Continued efforts to reduce trade barriers and some recovery in global growth will help sustain strong export growth. The implementation of the peace agreement will promote regional development and reduce inequality,” IMF’s report added.
On the other hand, “the economy remains vulnerable to uncertainties from a sudden tightening of global financial conditions and escalation of trade or geopolitical tensions.”
In addition, “placing public debt on a declining path is an appropriate fiscal target which would also leave room to fine-tune the consolidation pace as guided by the fiscal rule.
“IMF directors encouraged [Colombian] authorities to focus on improving tax administration, as associated revenue gains will create space for public investment. They highlighted the need for a comprehensive pension reform to increase coverage and progressivity.
“The current monetary policy stance should be conducive to a recovery in activity and reducing the [discount] rate further in line with inflation expectations could be warranted if the recovery faltered.
“Directors agreed that the flexible exchange rate regime has served Colombia well and should remain the first line of defense against global shocks as well as help accumulate adequate buffers.
“Directors noted that the banking system has been resilient amid the economic slowdown, reflecting partly effective financial supervision and ample capital and liquidity.
“They welcomed recent regulatory measures to homogenize banks’ loan restructuring practices and to bring regulation closer to Basel III standards, including through the implementation of the conglomerates law,” the IMF report concluded.
Energy Demand in Colombia, Antioquia Rising Year-on-Year
Wednesday, 18 April 2018 11:30 Written by Roberto Peckham
Medellin-based national electric-power grid operator and power-trading center XM announced April 17 that power demand in Colombia is up 3% year-on-year through first-quarter (1Q) 2018, compared to a 1.8% net year-on-year decline in 1Q 2017.
Over the last 12 months through March 2018, Colombian power demand is up 2.5%, whereas power demand actually fell 1.5% over the comparable 2016-2017 period, XM found.
Meanwhile, power demand in Antioquia rose 3.7% year-on-year for the month of March 2018, versus a 3.2% net decline year-on-year in March 2017.
The power-demand figures indicate that Colombia generally and Antioquia specifically are starting to emerge from recessions that hit in 2016 and especially 2017, when a hike in value-added tax (VAT) slammed consumer spending and (consequently) industrial output.
For the month of March 2018, national power demand rose 4.4% year-on-year, compared to a 0.3% year-on-year contraction in March 2017, XM noted.
The relatively strong demand growth has exceeded prognostications by Colombia’s national energy-planning agency -- the “Unidad de Planeación Minero Energética" (UPME), XM noted.
Residential and small-business demand grew 4.4% in March 2018 versus March 2017, while combined industrial-commercial demand in March 2018 grew an even stronger 4.6% year-on-year, the agency noted. However, manufacturing demand in March grew by just 0.8% year-on-year, according to XM.
The greatest year-on-year demand growth in March 2018 was in Guaviare department (up 9.4% year-on-year), while the Tolima-Huila-Caqueta region saw demand jump 8.1%, and the Atlantic Coast region saw demand grow 6.8%, XM found.
Colombian Full-year 2017 Exports Jump 19% Year-on-Year
Monday, 05 February 2018 12:22 Written by Roberto Peckham
Colombia’s national economic statistics agency (Departamento Administrativo Nacional de Estadistica, DANE) revealed February 5 that full-year 2017 exports jumped 19% year-on-year, to US$37.8 billion, up from US$31.7 billion in 2016 -- a year that saw exports drop 11.8% year-on-year.
By dollar value, petroleum and mining exports led the field, up 32.4% year-on-year, mainly from coal, petroleum coke and briquettes, DANE found.
Agricultural, food and beverage exports rose 7.2% -- mainly thanks to a rise in palm-oil export -- while manufacturing exports rose 2.4%, up from a 10% net decline in 2016, according to DANE.
By department, Antioquia once again led the nation in 2017, accounting for 18.1% of total national exports (excluding petroleum).
Exports in the broad “other” category in 2017 rose 15.7%, mainly from a rise in gold exports (dominated by Antioquia).
The USA once again led all nations in share of receipt of Colombia exports, at 29.7% of the total, followed by (in order) Panamá, China, Netherlands, México, Ecuador and Turkey, according to DANE.
Colombia’s Banco de la Republica 2018 Survey: Peso/Dollar Range COP$2,800 to COP$3,200
Thursday, 18 January 2018 08:40 Written by Roberto Peckham
The latest monthly survey of leading banks and financial firms by Colombia’s Banco de la Republica (the national bank) finds that the Colombian peso is likely to trade in a range of COP$2,800 to COP$3,200 per US$1 during 2018, with a foreseen average of COP$2,995/US$1 by year-end.
The monthly survey (see: http://www.banrep.gov.co/es/informe-estadisticas-monetarias-y-cambiarias) of 40 leading private banks, stock analysts, pension funds and international organizations also sees the COP/US dollar trading in roughly the same ranges through 2019 and 2020.
Severe cold weather in the northern hemisphere in recent weeks has boosted global energy demand, with the result that rising oil prices -- traded in US dollars -- habitually weaken relative values of the US dollar against other currencies, including the Colombian peso.
As a result, the Colombian peso has been trading below COP$2,900/US$1 in the last couple of weeks, down from more than COP$3,000/US$1 during several days in Decemeber 2017.
The same survey also found that full-year 2018 inflation is likely to come-in at around 3.47%, with full-year 2019 inflation seen at around 3.33%.
Gross domestic product (“PIB” in Spanish initials) is seen growing by 2.45% this year, according to the average forecast of the surveyed analysts.
Colombia GDP to Rise 2.6% in 2018: Latest United Nations ECLAC Study
Tuesday, 16 January 2018 07:35 Written by Roberto Peckham
In a new study released January 15, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) finds that Colombia’s gross domestic product (GDP) is likely to rebound to 2.6% growth in 2018, up from 1.8% in 2017.
“GDP is projected to expand by 2.6% in 2018 against a backdrop of lower interest rates, higher oil prices and an expected improvement in the performance of the economies of the United States and the Euro area,” the latter two areas being key Colombian export markets, according to the study.
During 2017, Colombia’s domestic demand slipped, pinching GDP growth. However, “there are some indications that the slowdown may have now bottomed out and that the growth rate will have begun to pick up [since] the third quarter of 2017,” according to ECLAC.
Meanwhile, “the upturn in international mineral and oil prices [during 2017] helped to bring down the deficit on the goods account as the value of fuel exports strengthened,” the study noted.
“Foreign direct investment (FDI), although weaker than the year before, and portfolio investment were the two categories of inflows that made the biggest contributions to the financial account in the first half of 2017,” according to ECLAC.
On a related front, “gross fixed capital formation rose slightly thanks to an acceleration of investment in civil works, agricultural facilities and transport equipment. Investment in construction slumped, however. Government consumption climbed at a rate of 3.5%.
“Growth was driven by the agricultural sector –with coffee production and other crops leading the way– and by sectors associated with social, personal and financial services,” the study noted.
On the other hand, “the construction sector was hurt by weaker building demand and by contractual problems that delayed the closing of the financial packages for the 4G [fourth-generation] road infrastructure program.
“The mining sector continued to decline, although there were some faint signs of a recovery thanks to an upturn in prices,” ECLAC added.
Fedesarollo Predicts 2.4% Rise in GDP
Meanwhile, Fedesarollo -- Colombia’s leading economic think-tank – on January 12 released its latest Tendencia Económica (economic trends) report, finding that national GDP is likely to grow by 2.4% this year.
Fedesarollo also noted that Wall Street bond rater Standard & Poor’s last month cut its rating on Colombia’s sovereign debt to "BBB-", down from a prior "BBB" rating, although maintaining a “stable” outlook. “The decision by S&P highlights the fiscal challenges over the mid-term,” Fedesarollo’s report noted.
Although federal tax collections in 2017 were “weak,” Colombia’s fiscal goals were met thanks to a COP$4 trillion (US$1.4 billion) cut in government spending along with a one-time fiscal gain from massive fines imposed upon cell-phone companies accused of price-rigging, the study found.
However, such one-time gains aren’t in the cards in future years, so the government must take further steps to maintain its fiscal targets, Fedesarollo added.
Meanwhile, the most recent economic indicators show that Colombia’s full-year 2017 GDP growth likely finished at around 1.7%, while latest GDP forecasts for 2018 indicate a likely rebound to around 2.4% growth, the study noted.
Mining, Energy Still Crucial to Fix Colombia’s Weak Finances: Fedesarollo
Wednesday, 13 December 2017 15:03 Written by Roberto Peckham
Colombia’s top economic think-tank -- Fundación para la Educación Superior y el Desarrollo (Fedesarollo) -- on December 13 unveiled a report which finds that mining and energy projects will continue to be crucial to restoration of slumping national government finances.
Antioquia is Colombia’s biggest gold-mining department -- and hence figures into the equation.
“The future of the mining and energy sector is key for the stability of foreign currency reserves and government finance for the coming years -- and for social well-being,” according to the latest Tendencia Economica (economic trends) report from Fedesarollo.
“Nevertheless, the panorama for the [mining and energy] sector looks uncertain. Therefore it’s indispensable to create the necessary conditions to increase production of petroleum and other minerals in the mid-term," according to Fedesarollo.
“While petroleum prices have recovered in the short term, there are various factors that could affect crude production in the future.The decline in [national crude] reserves is paired with relatively low rates of return in the sector. This provides little incentive to stimulate private investment in secondary recovery [at existing crude production sites] or for projects to exploit unconventional reserves through practices such as hydraulic fracturing [fracking],” the report adds.
However, fracking “faces hostility from many sectors of society as well as environmental authorities,” Fedesarollo’s report notes.
“On the other hand, production of petroleum, coal and other minerals confront important obstacles associated with institutional weakness and unstable rules [involving] government environmental licenses and community consultations” that could spell “grave economic and fiscal consequences for the nation,” the report warns.
Colombia Exports to Jump 16.5% in 2017; Big Improvement over 2016
Wednesday, 01 November 2017 13:33 Written by Roberto Peckham
The Economic Commission for Latin America and the Caribbean (ECLAC) announced October 30 in a new report that Colombia’s exports are forecast to rise by 16.5% for full-year 2017, up sharply from a 12.8% decline in 2016.
Meanwhile, imports to Colombia are expected to rise 5.2% this year, up from a 16.9% decline last year, according to ECLAC’s report (see: http://repositorio.cepal.org/bitstream/handle/11362/42316/1/S1700860_en.pdf).
For the entire Latin America and Caribbean region, collective exports are seen rising 10% this year. Only Brazil (up 18%), Honduras (up 29.6%) and Nicaragua (up 23.5%) are seeing bigger percentage increases in exports than Colombia in the Latin America region this year, the report shows.
“Socialist” Venezuela is the only country in all of Latin America showing a decrease in imports this year -- down 21.8% -- following a 35.7% decline last year and a 22.3% decline in 2015.
“South American countries are projected to post the strongest increases in [export commodity] prices owing to the greater weight of petroleum, minerals and metals in their export baskets, particularly those of Andean countries,” according to the report.
“Colombia is expected to post the strongest increases in prices as its main export products include petroleum and coal,” it added.
On the other hand, “success of traditional and modern services exporters in the region depends heavily on the public-private strategies in place to support this sector,” according to the report.
“Examples in the region are the Productive Transformation Program established in Colombia in 2009, with targets for 2019 for software and information technology (IT) services exports, business process outsourcing (BPO) and knowledge process outsourcing (KPO).
“Some countries have designed specific support instruments to promote modern services exports. In Colombia, ProColombia has designed special programs for the promotion of BPO, ITO and KPO service companies, including through the provision of buildings with operators that provide specialized services (communications, energy, security and mass transport for example) to exporting firms,” the report added.
Coffee Helps Colombia’s 2017 Exports Rebound, but Manufacturing Lags
Friday, 29 September 2017 12:23 Written by Roberto Peckham
The latest report from Colombia’s national economic statistics agency (DANE – Departamento Administrative Nacional de Estadistica) shows that Colombian exports through August 2017 are up 15.7% year-on-year and 19.5% for the first eight months of 2017.
Antioquia once again leads all departments in the nation with an 18.8% share in total dollar value of exports (excluding petroleum), while the United States continues as the number-one destination for Colombia exports, receiving 29.1% of the total, according to DANE.
Agricultural product exports (including processed foods and drinks) jumped 22.2% year-on-year in August, while the first eight-months of 2017 saw a 13.4% rise compared to the same eight months in 2016, mainly thanks to coffee exports.
However, manufactured product exports so far this year have fallen 11.2%, the agency found. Exports to neighboring “socialist” Venezuela showed the steepest drop – down 61% this year-- thanks to that country’s ever-worsening economic disaster, the DANE statistics show.
By categories, the biggest declines in exports were in chemicals, specialized machinery, non-metallic minerals and pharmaceuticals.
As for “other” Colombian exports, this sector showed a 10.4% year-on-year gain in August, mainly because of a rise in gold exports, up 11.5%.
For the first eight months of 2017, combustible product exports showed a 27% improvement year-on-year, mainly because of a jump in coal and petroleum-coke exports, DANE found.
