What Jumps Out: Colombian Central Bank Holds Steady as Unemployment Falls Further

There was no surprise Friday, as the Colombian central bank left rates at 13.25%. Few expected anything different, although both the national government and the National Business Association of Colombia (ANDI) will be disappointed as they keep an eye on slowing GDP.

It was a split vote of 5-2. Hopefully, by October, it will be slit the other way.

After the meeting, Colombian Minister of Finance Ricardo Bonilla commented that month-over-month inflation in August (0.7%) was above expectations. He gave a nod to increasing fuel prices, and noted that the government is now hoping for a year-end 2023 reading of 7%. Meanwhile, last week’s Fedesarrollo survey suggested it would be 9.4%.

August unemployment from the National Administrative Department of Statistics (DANE) continues to impress, with both urban and national rates dropping from 10.8% and 10.6%, respectively, to 9.6% & 9.3%. The numbers for those in work also rose to 66.4% and 64.4%, respectively. Total numbers in work rose by over 1 million, year-over-year, with the largest contributions coming from industry, public services, agriculture, and accommodation/restaurants.

That last one is a nod to fast-growing tourism — with the government now expecting 5.2 million foreigners to arrive in Colombia this year, which would be up 13.5% year over year. This appears low, given January-July there was an increase of 34%. The issue, according to ProColombia, is that the country has an infrastructure and hotel capacity for 7.5 million with a government target of 12 million tourists within four years.

Getting back to unemployment data, and to contextualize those numbers fully: You can only compare with the equivalent month, 12 months ago, if you want apples-apples. For national unemployment, it is the lowest August since 2016. And for urban unemployment, it is the lowest August — EVER!

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