What Jumps Out: Colombian GDP Grew by 3.0% in First Quarter of 2023

The Monday report is a little later today as, in the absence of a tremendous amount of news, it was pertinent to await the release of the Q1 GDP number from Colombia’s DANE (Departamento Administrativo Nacional de Estadística).

The YoY Q1 number was 3.0% versus a consensus expectation of 3.5% — exactly as suggested by the survey from the Colombian central bank, Banco de la República. The QoQ number of 1.4% actually beat the estimate of 1%. There was an adjustment downwards in the FY2022 reading from 7.5% to 7.3% — important but still a blowout number.

YoY there was growth in every sector (bar one) with the biggest contributions coming from Finance (+22.8%) and Arts/Entertainment (+18.7%). The one blot was Construction, which fell 3.1% YoY and this was largely explained by Civil Works. That Q1 Civil Works data was already released and there was a 14.9% reduction YoY (this follows on from -12.8% in Q422). The main category here contains roads, runways, tunnels and tunnels, which dropped 22.9%. There were a couple of areas of growth, Ports (+27.8%) and Gas Pipelines (+34.7%), but they are very small and don’t move the needle.

DANE also released the Economic Activity NSA for March, which came in at 1.6%, above the 1.3% anticipated but below the 3.0% registered for February, although that February figure has now been revised down to 2.4%. The biggest declines YoY were heavyweight areas such as Commerce (-2.6%), Manufacturing (-0.8%), and Construction (-4.6%).

Later this week, we will also have the Imports (estimated $5.4 billion) and Trade Balance (-$850 million) for March and, with Exports having struggled somewhat, the size of the deficit will be under the microscope.

Banco de la República and Bloomberg will both release their economist surveys during the week.

In terms of the markets, the press and analysts are in agreement: Stocks are cheap on almost any metric you wish to use, the problem is that volumes are in the ICU. The COLCAP is 7.7% lower over the past month, despite already tempting valuations and a results season that thus far is reading well. The Colombian peso, having dropped around 0.6% last week as the dollar surged, is already improving this morning as part of a global bounce against the greenback.

Away from macro data, the Health Reform (he types holding back a yawn) will be on the agenda again, but given the current balance in Congress it is going to be sticky progress for the government. Over the weekend, we again saw Gustavo Petro asking the financial sector to lower some of their key interest rates, this coming amidst some criticism over the central bank’s handling of overnight rates. I am no Petrista, but I concur in terms of the most recent rate increases when compared to the weak macro data that is being presented.

About it for this Monday lunchtime!

Regards,
Roops

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