Colombia Is Playing the Blame Game When It Comes to the Weather

If there is one thing — beyond a dysfunctional congressional system — that Colombia has inherited from the United States, it’s the capacity to assign blame wherever possible.

On this occasion, it is regarding the impact of El Niño.

Both water and energy are in short supply, and suddenly it needs to be the government’s fault. Reservoirs have fallen below 30% — approaching critical levels. While the weather is slowly turning more rainy, it’s not happening quickly enough.

Blaming the government is both pointless and inaccurate. If anything, El Niño has been milder than expected, so what were they meant to want about? Let’s not forget that months before the drought even started, Colombian President Gustavo Petro was trying to implement special measure to protect the worst impacted regions — and these measures were blocked by the courts.

Now, in order to save water and energy, today has been named a “Civic Day” in Colombia where effectively there is no obligation within the public sector to go to the office or study. It’s a drop in the bucket — or reservoir — but perhaps this is better than doing nothing during a crisis.

Every journalist is now a climate expert, producing articles about Colombia needing more solar power in order to produce counter-cyclical energy. This is very true, and Colombia has been disastrously slow in building out solar energy. But that isn’t on Petro. In fact, this is a government that have discussed green energy since the day they began, in the face of heavy criticism, while overseeing the highest oil production in eight years. Fortunately, solar farms are now starting to appear all across the country.

In economic news, Fedesarrollo released its April survey, which saw no change in the 2024 inflation estimate (5.51%) but an increase in year-end overnight interest rate expectations from 8.00%-8.25%, which doesn’t quite compute. Meanwhile, the organization’s GDP estimate was also unchanged, projecting growth of 1.3% in 2024 and 2.5% in 2025.

Estimating GDP is a tricky business. Last week, the the World Bank also lowered its 2024 estimate for Colombia to 1.3% (down from 1.8%), but they are now looking at growth of 3.2% for 2025. Meanwhile, this week the International Monetary Fund estimated 1.1% and 2.5% for the next two years, respectively. Of note: the IMF expects Venezuela to be the fastest-growing economy in the region at 4.0%, which can only be good for Colombia.

The real sector continues to struggle according to the National Administrative Department of Statistics (DANE). February saw retail sales (-1.8%) and manufacturing production (-2.2%) both struggle, much as expected. Interest rates may have begun to fall, but Banco de la República has yet to get the message fully across to the market and consumers.

The reform process is crawling forward. There have been advances on both the pension and education sides — but there’s still a distance to go.

Finally, the Colombian peso has been stable this week despite Middle East events, while the COLCAP is slipping after a good start to 2024. That said, volumes for the index are at least more healthy than they wore in 2023.

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