What Jumps Out: The Holiday Week Ahead

Whilst floods of Colombians have already arrived at the beach or the farm, the working life goes on – and there are a few things to go through.

Last week ended with the Central Bank raising rates, as expected, by 1% to 12% – but it wasn’t as simple as that. There was split vote with one vote for 1.25% and another for just 0.25% – the majority though went for 1%. The committee overall remains surprised by the stubbornness of inflation but also sees the end of the tightening cycle. Other issues discussed were the perception that food inflation will drop in 2023 and that the committee has no desire to intervene in the forex market. The only question remaining is whether 12% will be the terminal rate – some think 12.5% will be that number but the December inflation reading on January 5 will give better clues.

Colombia and Venezuela, ahead of the full border opening on January 1 have jointly applied for 16 bilateral projects to CAF, the InterAmerican Development Bank – amongst other sectors, agriculture and petrochemicals are included. Yet more steps towards the rebuilding of what once was a prosperous economic relationship.

The week ahead will feature a number of economic releases.

Today we have the Economic Activity reading for October which is expected to rise to 5.2% having dropped to 4.2% last month – if that happens it would be going in the opposite direction of most recent data.

On Tuesday we have the Central Bank minutes but that is likely to bring very few surprises. On the other hand, what will the import data for October bring? The export data was a disappointment and if domestic demand has continued along its recent past then look for another bumper and unwelcome Trade Deficit. Look for total imports of US$5.9bn and a Deficit of US$1.29b.

Finally on Friday from Fedesarrollo we have the Retail and Industrial Confidence data for November – it’s hard to see past more slippage in the numbers.

In terms of the markets, equities will continue to follow the rest of the world but the Peso has enjoyed a very good couple of weeks of out-performance – some of this is undoubtedly due to underperformance in the weeks after Gustavo Petro came to power, which is now being adjusted for.

Finally for today, the minimum wage may have been settled with an increase of 16% but the government hasn’t finished yet. Ordinarily, this would trigger the same 16% increase or over 200 products nationally but President Petro is looking to break this vicious circle and limits many increases to 12%, including transport, rents and energy. This will require a mountain of paperwork but would represent a very successful start to 2023 if they can move those increases down to inflation – around 12.5%.

Please find link to LinkedIn video below :

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_what-jumps-out-the-week-ahead-whilst-floods-activity-7010535194852007936-DR69?utm_source=share&utm_medium=member_desktop

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