What Jumps Out: Latest Fedesarrollo Survey Shows Higher 2023 GDP Forecast for Colombia

The June numbers are in, and analysts have had their latest say on the economic data in the Fedesarrollo survey for June. Overall, we are seeing a continued warming in the economy, although that sentiment wasn’t seen across the board.

Here’s a summary of some of the key areas.

GDP Growth

Colombian GDP for 2023 saw the outlook rise from 1.1% to 1.5%, moving closer to the estimates of overseas agencies. Once again — despite opinion polls declaring we are heading for Armageddon — we see various stakeholders increasing the GDP outlook while there was also a jump in consumer confidence last week. For 2024, which will depend greatly on the actual 2023 results, there was a small reduction in the GDP estimate, falling from 2.3% to 2.2%.

Inflation

CPI estimates for 2023 rose from 9.15% to 9.22%. For the 12-month forecast, it is expected to fall to 6.82%. All eyes will be on the June reading from DANE in a couple of weeks.

Interest Rates

There has been a slight cooling on the outlook for the overnight rate for year-end of 2023, from 12.0% to 11.75%, with a 12-month outlook of 9.5%. For this month, the Colombian central bank will leave rates at their 13.25% peak.

Colombian Peso

There has been a dramatic revaluation of the currency recently and that is reflected in the latest analyst estimates. The new year-end 2023 consensus is 4,300 pesos to the US dollar versus 4,600 a month ago. In reality the peso never deserved to be at 4,500+ level, so this is a welcome, more-rational view.

Equities

There is a renewed sense of positivity around the COLCAP, with 81.5% believing the market will rise over the next three months versus 69.2% a month ago. In terms of sectors, holdings companies are the preferred choice, in particular Grupo Argos. In terms of other names, ISA Interconexión Eléctrica and Nutresa, despite the uncertainty over the new Gilinski leadership, are also in demand.

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