Colombia’s consumer confidence index (CCI) came in at -10.7% in December, according to Fedesarrollo. The economic authority noted that the monthly consumer confidence balance deteriorated at all socioeconomic levels, particularly in the upper level. This also marks three straight months of deterioration for overall.
This figure was below both market expectations of -5.3% and the forecast of Colombia’s largest bank Bancolombia, which had predicted the index to be -6.9% for the month.
“With this result, the CCI closed a calendar year in which it remained permanently in negative territory, a behavior that the indicator had not experienced in previous history,” wrote Bancolombia in a note to investors. “In fact, after reaching 1.1% in December of 2015, the index fell sharply in January last year (-21.3%). From this point it recovered to -2.1% in September 2016.”
Four of the five cities surveyed had a negative CCI balance. Barranquilla is the lone exception at positive 2.3%. Bucaramanga is the most negative at -19.3% while Colombia’s two largest cities — Medellín at -16.1% and Bogotá at -12.0% — are also both into the double digits. Cali sits at -3.0%.
After showing recovery throughout the first three quarters of the year, Colombia’s consumer confidence again began to fall. As a cause, analysts at Bancolombia have listed the political climate and uncertainty of the October 2 plebiscite in which Colombians rejected a peace deal with the Revolutionary Armed Forces of Colombia (FARC). The ongoing debate about the tax reform that ultimately passed Congress in the final days of the year also shook the public faith.
The largest concern in the minds of consumers in December was their expectation for the economy in 2017. The tax reform raised the nation’s value-added tax from 16% to 19%, and many Colombians — including everyday people, small business owners, and CEOs alike — are worried about the effect that this increase, among other tax code changes, will have on an already slow-growing economy.
Respondents did register an uptick in December in their willingness to buy durable goods, including furniture and appliances, however. This coincided with an increase in people’s willingness to purchase housing in Medellín, Cali, and Barranquilla. But this was not a viewpoint shared across the country. In Bogotá and Bucaramanga, the willingness to buy a house fell significantly and brought the nationwide indicator into the negative.
“This report highlights the challenging environment that Colombian consumers are experiencing, which not only validates the slowdown in domestic demand observed in the third quarter of 2016 but also leads us to predict that it’s extended to the fourth quarter and the beginning of 2017,” wrote Bancolombia.