What Jumps Out – The Week That Was: December 9

A disrupted week in Colombia with the ‘Candle Day’ holiday yesterday which means that more than a few locals will have headed off for the weekend already as this represents the official start of the Christmas season.

Looking back on the week several data points were published – none of which were particularly positive:

Inflation for November was 0.77% – higher than expected, again driven by food which rose 1.5% MoM. This led us to a 12m reading of 12.53% – the highest since March 1999. At this juncture it looks like the Banco de la República will have little choice when it sits down next week but to increase rates from 11-12%. That would be in line with the terminal rate being predicted by analysts in surveys held by entities such as Bloomberg and Fedesarrollo.

Exports for October were so disappointing I was driven to produce a special video. They may have risen FOB 10.9% but that is masking the real situation. Over 90% of that increase was due to coal and the increase in global prices – to highlight that in tonnage terms Coal fell 8% YoY. Oil was an even worse read with a 6.9% drop in dollar terms and 11.1% in tonnage as 11,839 barrels were shipped, down 12.1% YoY.  Expect another ugly trade deficit number when Imports are published.

Remaining with oil for a second, it is worth noting that despite a week in which the black stuff has fallen 10%, the Peso has held up well.

Fedesarrollo released the Consumer Confidence November and at -24.8% it was below both expectations (-21.4%) and October (-19.5%). No one can be overly surprised – the tax reform may now have been completed, which has lowered the political temperature, and the economy may be running strong – but there are enough headlines around pointing to a slowdown in both Colombia and overseas, to worry most people.

Finance Minister Ocampo was discussing the Current Account Deficit this week and felt things are going in the right direction. Whilst Colombia is likely looking at a 7% deficit in 2022, there is the expectation for a Primary Surplus in 2023 – that would equate to a deficit of 4.3%. Looking further out – a figure of 1.7% is expected for 2024.

We started this note discussing the fact that Colombians are on their travels – and we end it noting that a number of Medellin executives from the ‘GEA’ were in Abu Dhabi in meetings with IHC who recently, in conjunction no doubt with the Gilinski group, tendered for a stake in Grupo Nutresa. There are conflicting reports – was it a visit or was it an invitation? No doubt the situation will continue into 2023.

Please find LinkedIn Video Below:

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_what-jumps-out-the-week-that-was-colombia-activity-7006956121542283264-BMHe?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