What Jumps Out: Consumer Confidence Is Still Rising in Colombia

Fedesarrollo‘s consumer confidence number for June came in at -14.1%, well up from May’s -22.8% and April’s -28.8%. Whilse a surprise to some — given that we have now completed several months of struggling real sector data from the National Administrative Department of Statistics (DANE) — it is important to note that not all macro data is going in the wrong direction, much as President Gustavo Petro’s political opponents would want you to believe that.

We have seen hundreds of thousands of jobs created over the past 12 months, the current account deficit is edging in the right direction and inflation has topped out. All we need now is for interest rates to begin falling. Finance Minister Ricardo Bonilla of MinHacienda is anticipating that inflation will fall to 9.5% (year over year) by December, and interest rates will accordingly fall from 13.25% to 11.0% over the same period.

Accordingly, within the Fedesarrollo report we saw Consumer Expectation increase from -14.5% to -6.5% and Economic Conditions rise from -35.2% to -25.4%.

There were also increases in the propensity to buy in Durables Goods (-44.1% to -30.9%), Vehicles (-66.7% to -57.4%), and to a lesser extent Housing (-44.9% to -43.5%).

These latter sectors are likely impacted by a Colombian peso that has revalued significantly, to $4,200 to the US dollar, and that affects both Consumer Durables and Vehicles as they are almost exclusively imported.

Housing, on the other hand, is still struggling due to continued high mortgage rates and this has been reflected in both new and used home sales.

The most confident city is once again Barranquilla (+4.5%), while Medellín (which is by a long way the most opposed to the Petro administration) is the most pessimistic (-30.9%).

One small change in the social-economic data is that it is now the Middle Income group (-10.3%) who are the most optimistic – habitually it has been those at the bottom of the income ladder.

An encouraging number — but there is still a long way to go.