What Jumps Out: A False Narrative Gains Steam Amid More Opinion Poll Mumbo Jumbo

The latest disapproval rating for Colombian President Gustavo Petro has been in the news, and the prevailing opposition and media narrative is that the less popular he is, the less chance there is of radical reforms. Therefore, the Colombian peso is doing well.

While Petro has a long way to go before hitting the lows of former President Iván Duque, this narrative is twaddle for all but the initiated.

Petro never had a congressional mandate and the institutions, as predicted, are a thorn in the side of almost everything he is trying to do. The peso is where it should be, oil production has constantly increased, US rates have stabilized, and Colombia’s currency is hardly ever touched by domestic events.

That hostile institutionality was on view a few weeks ago when the Supreme Court blocked what was a very rational decree issued by Petro to control the use of water in La Guajira, Colombia’s poorest and driest region, due to El Niño. Fortunately, the government has now launched a new project in conjunction with Grupo Aval (massive hats off) to protect the people in the region who have been forgotten for decades.

Despite El Niño pushing energy prices up, the latest data for November suggests a month-over-month stabilization of both prices and, crucially, reservoir levels.

In other news:

• This week’s keynote event will be the Banco de la República meeting, and consensus is that rates will finally start to come down to 13%. Looking at last week’s weak real sector data for October, as well as struggling consumer confidence reported from Fedesarrollo, there is perhaps room for a bigger cut. The committee, however, is conservative by nature. If there were to be no cut, then expect a crescendo of complaints from both the private sector and the government — not to mention accusations of political meddling.
• Another bank, Bancolombia, was reporting back after COP28 where the global move against fossil fuels took another small step forward. Again, paradoxically, Petro is criticized by the opposition for seeking a greener Colombia — despite that, under a president who, according to detractors, was going to end the oil sector, production has risen since the day he was sworn in.
• Fedesarrollo issued its latest surveys. Consumer confidence fell in November to -20.6% (from -16% month ago), retail confidence was stable (-14.7%), and industrial confidence (-3.7%) fell into negative territory.
• Inflation watchers will have noted there will be no gasoline price increase in December, though the Ministry of Finance is discussing perhaps just one more rise.
• Minimum wage negotiations continue with no result as of yet. A presidential decree may be the only solution.
• Finally as we know Colombia does love a think-tank, bobble head organization. This week 32 Federations met to elect a new leader of the Council of Federations – protectionism gone wild!

Never miss Rupert’s latest commentary
Follow him now on LinkedIn to see What Jumps Out