What Jumps Out: Shakespeare, COVID, & The Colombian Economy

It is doubtful that in 1603 that Mr Shakespeare was thinking of COVID when he sat down to write Hamlet however that doesn’t mean his words aren’t valid for today’s circumstances.

Even before the Colombian populace had returned to the cities after the Easter break, new lock-down measures were being announced and those arriving were being asked to take extra precautions. ICU levels have hit the 90% levels again and some cities have already limited medical procedures in order to avoid a collapse. Bogota has announced a full curfew this coming weekend from early Saturday until Tuesday – their ICU situation is better than other cities so we may see further measures from other parts of Colombia.

On top of this there are two other major concerns:

1. If Christmas is anything to go by there will be a lag before we see the real impact on infection numbers – the poor levels of testing will only complicate the situation.
2. The vaccine roll-out is painfully slow – with the exception of Chile that is the LatAm situation, but Colombia is struggling logistically. A total of ~2.4mn have been administered thus far versus a target of vaccinating 35 million people in 2021.

A further 280k doses of the Pfizer vaccine landed over the weekend and 2 million more are due in April but with the globe’s delivery problems it may be a case of wait and see. Also, Colombia was the first recipient of COVAX vaccines in the Americas. However with India, the biggest supplier, having frozen exports on March 24, that is another area of doubt.

As if to highlight the problem, the government is on the verge of sanctioning the private sector to purchase, import and distribute vaccines. This of course will be controversial and needs to be handled delicately. The government has already stated the vaccines cannot be ‘sold’ and hopefully the aim will be for health companies to inject their own key workers first, but there is plenty of room for ethical debates.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

None of these issues are exclusive to Colombia but there is a worrying combination of over complacency, low vaccination and high ICU levels that needs to be addressed if a third wave is to be kept under control and avoid economic contagion. That is something Colombia can ill afford, especially given the pressure from the ratings agencies. However it seems inevitable given the current situation that we won’t see at least some adjustments to the growth outlook.

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Away from COVID, and it is hard to get far away anywhere on the planet, we have had a couple of macro numbers to chew over.

First up February urban employment was 18.09% and for all those pointing out the MoM improvement, it remains a massive concern. It was above the 17.7% expected and miles above the 11.54% we had in pre-pandemic February 2020. In terms of the total unemployment it is the same picture with the 15.9% number being well above the 12.16% a year ago – that said it has moved further in the right direction.

As has been mentioned by the authorities, and which is calculated on a 3-month MA basis, female unemployment continues to be a major concern.

For February, the figure for women stood at 20.7% – down from the 2020 high of 25.5% but when compared with the high of the male population, 17.4%, which has now fallen to 11.7%, quite clearly inequality remains an issue for the government to wrestle.

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Inflation for March was slightly ahead of expectations in terms of both the MoM and yearly data.

On a monthly basis inflation rose 0.51% (est 0.43%) which brought the 12-month number to 1.51% (est 1.45%) – a year ago the rate was at 1.67%, just before the country hit the pandemic wall.

Looking at the sectors we saw increases in several of the key areas including food (3.92%) and housing (1.84%) although these were somewhat balanced out by Education (-7.91%) and Information & Comms (-1.5%).

There will be nothing here to alarm the Central Bank who only last week decided to leave overnight rates at 1.75% – no doubt they had seen a preview of the numbers released yesterday.

One question will be the effect of the tax reform on the inflation basket, especially with VAT set to be levied on more products however for the time being it is hard to see any action from the authorities in terms of rates until much later in 2021.

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That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops