What Jumps Out: Pistols Drawn

After last week’s dearth of news, Colombia is back with a bang. It’s hard not to touch on the allegation that Gustavo Petro is a drug addict – it is also impossible to avoid the fact that the letter was penned by a man (Álvaro Leyva) who was recently scorned by the government when trying to tender for the lucrative corruption-infested passport contract.

The accusations, including that Petro has been ‘kidnapped’ by another member of the cabinet, are fast being debunked. Still, it is also probably no coincidence that it is the same week as the questions for the labor reform were submitted to the senate, and arch-rival Álvaro Uribe is back in court trying to avoid a conviction. Little that passes in Colombian politics is unconnected.

We will see how the labor reform referendum goes, but given the simple requests by developed world standards, it is hard to see the populous saying no. Still, there are hoops to get through first – on top of that, he will need to get the backing of some 13 million and Colombians aren’t the most proactive voters.

On top of recent strong retail sales (February) from Departamento Administrativo Nacional de Estadística – DANE Colombia and consumer confidence (March) data from Fedesarrollo it was no surprise to see another healthy increase in imports for February of 10.5% with manufacturing representing 74% of total imports and which are a consequence of lower interest rates.

One source of potentially lower imports is US cars, with Washington insisting that Colombia remove some certification process – if not, they will stop shipping. Asian and European manufacturers will be happy to step in. This week saw the celebration of 70 years of the Colombian-American Chamber of Commerce – awkward canapé chat!

The knock-on effect due to suffering exports, largely due to oil prices and coal demand, is the $1.2 billion USD trade deficit for the month, which taps into the ongoing fiscal concerns. In the same vein, DIAN reported a Q1 tax collection increase of 6.8% YoY to COP72.14 bn – however, it is still way below what’s needed.

Economic activity for February (1.78%) was healthy, although down on January’s 2.6%, however this week we saw the IFC – International Finance Corporation cut GDP estimates across the board due to Trumponomics and Colombia was cut from 3% to 2.4% – in line with S&P who reduced to 2.5%.

In a blow to the commodity sector, Shell announced they will be leaving Colombia, diverting out of their JVs with Ecopetrol. The question is why after last year’s large natural gas discovery? It’s simple enough. Colombia isn’t a big shot in the sector, and there are bigger fish & countries to fry. It is something that Colombia needs to understand as soon as possible.

According to Aeronáutica Civil de Colombia, passenger numbers increased by 3.5% (470,000) in Q1 to 13,803,000. Tourism and travel, the big Petro bet, remains in rude health.

Have a wonderful end to the week.

Roops.

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Photo credit: mwewering from Pixabay.