The Colombian economy is continuing to slow down. After generating just 2.0% GDP growth in 2016 — the lowest rate since 2009 — the performance has waned even further in the first half of 2017.
The economy expanded by just 1.2% in the first quarter this year and that was followed up with an equally underwhelming 1.3% rate in the second quarter. Now, the nation’s central bank, known as the Banco de la República, is warning that the year-long total is likely to come in under 2.0%. Bancolombia, the country’s largest financial services company, is predicting a similar result.
To further shed light on how the economy is performing, the Banco de la República recently released an analysis of how the different regions throughout Colombia fared in the second quarter of 2017. The following are a series of summaries provided by the central bank about each major area across the country.
The capital’s economy for the second quarter of 2017 continued to show signs of slowing. Domestic trade deteriorated, in part, associated with lower consumer confidence in the current economic climate. Industrial production recorded a strong annual contraction, consistent with weak external demand, and a slower pace of domestic consumption.
In the case of construction, the indicators for civil works registered a slight improvement while the pace in building continued to slow down. On the foreign trade side, both exports and imports performed better. Labor market indicators for Bogotá registered an upward unemployment rate, accompanied by a greater acceleration in the unemployment rate for women than for men.
(departments of Antioquia and Chocó)
Domestic demand in Antioquia was restricted by annual declines in retail sales, new vehicle sales, gray cement, concrete production, and imports of consumer goods. However, although negative, there was an improvement in the consumer confidence index compared to the first quarter and an increase in the importation of capital goods.
The supply side highlighted the sharp decline in real production and sales in the industry, as well as lower performance in livestock, hotel occupancy, and gold mining. On the other hand, the transport of passengers advanced and exports grew, albeit at a slower pace than imports. Inflation also continued its downward trend and the unemployment rate remained stable.
(departments of Bolivar, Atlántico, Córdoba, Cesar, Magdalena, La Guajira, Sucre, and San Andrés)
During the second quarter of 2017, the region’s main economic variables recorded slight growth. This behavior was driven by the advances observed in agriculture, mining, industrial, transportation, trade (internal and external), and financial activities.
On the other hand, tourism and construction declined, with the drop in tourism being more pronounced. Prices continued to decelerate in their annual variation, and at the same time there was a deterioration in the labor market as a result of the increase in the regional unemployment rate.
(departments of Tolima, Cundinamarca, Huila, and Caquetá)
The economic outlook for the “central region” was characterized by the deceleration of growth in most sectors. Construction activity fell (cement, concrete produced, and new home sales), while the portfolio of the financial system slowed its variation. The extraction of oil remained on negative ground — given the difficulties of the international oil market — although the agricultural activity achieved an important increase.
Domestic trade was affected by the loss of consumer confidence and the increase in VAT from last year’s tax reform. Exports increased and imports declined. In the capitals of the region, the unemployment rate exceeded the national average and inflation declined.
(departments of Caldas, Risaralda, and Quindío)
In the second quarter of 2017, several economic activities deteriorated in the Eje Cafetero, or Coffee Region. Industrial production slowed its increase, as did the balance of sales volume, placements and imports. While international coffee shipments fell, the three departments were among the largest exporters of grain in the country.
In contrast, the area of construction, remittances, hotel occupancy, and ground transportation increased. The transportation turnaround was aided by the benefit of normal road conditions, following difficulties related to the transport strike in the same period of 2016.
The unemployment rate grew in Manizales and fell in Pereira. Armenia had the third highest rate in Colombia. Inflation slowed in each of these three most important cities in the region.
(departments of Santander, Boyacá, Norte de Santander, and Arauca)
The northeast’s economic activity continued to show a year-on-year decline in its main sectors during the second quarter of 2017. However, this trend was less pronounced than the figures reported at the beginning of the year.
The declines persisted in food supplies, livestock, egg production, oil extraction, and industrial production, albeit at lower rates. Trade also continued on the recovery path, and some figures related to coal, building, and new vehicle registrations were encouraging. Deposits from the financial system (including Finagro’s special line) also increased.
Unemployment rose in Cúcuta and Tunja, while inflation remained lower in those two cities as well as Bucaramanga.
(departments of Valle del Cauca, Nariño, Cauca, and Putumayo)
There were better results for several indicators that serve to monitor the economy of southwest, marking the positive consolidation of production in the second quarter. Although the domestic demand marked a sharp deceleration, on the supply side there was progress in agricultural production, livestock, construction, and external sales.
At the aggregate level, the Monthly Indicator of Economic Activity (IMAE) for Valle del Cauca, prepared jointly by the Banco de la República and the Pontificia Universidad Javeriana in Cali, suggested a 1.7% growth rate for the local economy compared to the same quarter of the previous year.
(departments of Meta, Casanare, Amazonas, Guainía, Guaviare, Vaupés, and Vichada)
The economy of the southeast region recorded negative results in the second quarter of in most activities compared to the same period of the previous year. Declines were seen in construction, new housing sales, cement, exports (excluding oil and its derivatives), imports, trade in vehicles, and oil production. The negative results were compounded by a high unemployment rate and a further deterioration in the perception of sales growth.
In contrast, progress was made in agricultural products, rice production, and agricultural credits, while the CPI variation in June was one of the lowest in recent years.