What Jumps Out: News Fest

Colombia is very rarely, if ever, bereft of news, and this week was no exception. In fact it was a bit of a doozy! The problem is where to start.

Energy: President Petro on Friday effectively took control of the energy sector for three months. Alarm bells are ringing at this development. What is he planning? That remains to be seen but it doesn’t bode well for the energy sector if he is looking to cap prices or anything similar.

The President himself spent Thursday with Venezuela’s Maduro pushing forward a trade agreement. An MOU was signed with regards to tariffs & products, with the prospect of cross border trade zones being created – has to be a positive.

As announced, we saw the street full of protestors this week. Some against government reforms, some supporting them and others with their own localized agendas. The demonstrations were neither biblical in size or violent in nature, which was encouraging in a country which has grown ever more polarized over the last decade.

Everyone was well warned on Monday that this would be an end-to-end week of macro data, and it didn’t disappoint.

The headlines were taken by the DANE reporting a 7.5% GDP reading for 2022 – the highest reading amongst the main economies of the Americas and also one of the top performing economies on the planet. Within the Q4 report there was of course a slowdown from the 10.6% registered in Q3 but the 0.7% QoQ reading was higher than the -0.3% expected.

The slowdown nonetheless had to come after such an increase coupled with interest rates that have more than tripled from 4% a year ago. The remaining question is just how far the economy will pull back in 2023 – the Central Bank lowered their estimate recently to 0.3%. The IMF this week referred to the cooling effect the Central Bank has had on both inflation and growth amidst a favorable update report.

To repeat my comment from earlier in the week, sadly the only sector in the red during 2023 was agriculture (-1.9%); an area where Colombia can be a regional leader if it learns to fully, or even partly, utilize the 32 million hectares of farmable land.

Exports in December as we know spluttered once again in both FOB and tonnage terms, and with Imports for the same month of US$5.8bn again beating consensus (US$5.7bn) – this meant another bigger than expected Trade Deficit of US$935mn (est US$800mn).

Manufacturing Production (+0.5%) was much weaker than expected (3%) and well down on the 4.5% seen in November. This is a growth number that has held up well over recent months – this time not so much. Of the 39 categories 23 fell YoY

Retail Sales which have struggled over recent months, finally fell into the red with a -1.8% reading, below the 1% predicted and down from 1.7% last time around. Here 11 of the 18 sectors were in negative territory with the leading contributors being home appliances (-24.2%) & automobiles/motorcycles (-7.6%).

The Central Bank released their latest economists survey for February and inflation estimates for 2023 rose from 8.59% to 8.83%, with a marginal cooling for 2024. In terms of rates, the expectation is a terminal rate of 13.25% in April – in January it was 13%. The economy remains warm.

Finally, the Peso proved it was no island – it has been tossed about all week by Fed officials and got close to the $5000 threshold once again on Thursday. Friday has seen oil slipping 2% and DXY again rising – that threshold may come into play.

Please find below the LinkedIn Video :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_colombia-energy-economy-activity-7032315203304222720-mkMk?utm_source=share&utm_medium=member_desktop

Have a great weekend

Roops