The data for the first quarter of 2021 indicates that the country could be entering a recovery path. The government and businessmen hope that the road blockades will not affect the reactivation.
The good news, in general, is that the Colombian economy seems to be very close to returning to the growth rate it registered before the onset of the pandemic. The Gross Domestic Product (GDP) data, which DANE revealed for the first quarter of 2020, exceeded all analysts’ expectations and stood at 1.1%, which is not only positive terrain, but a whole point above of the most optimistic forecasts.
“It is the first positive data since the pandemic began and confirms the ability of our productive apparatus to overcome the difficult situation generated by COVID-19, which affected the entire chain: from farmers, transporters and shopkeepers, to industry and the trade, “said Bruce Mac Master, president of Andi, through a statement.
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The accumulated figure for the quarter, although it represents good news, is certainly still modest in the eyes of some production unions, such as Fenalco. “Once again it is shown that commerce and gastronomy and accommodation services are the most affected, with a negative growth of 0.8%,” said the president of the union, Jaime Alberto Cabal.
Below the general headline are several details to examine in a little more detail. In the first place, the growth figures for March are very positive, with economic growth reaching 11.8% and practically boosting the record for the entire quarter, since in January and February the data were negative (-4 , 1 and -2%, respectively).
What happened in March? Several sectors and lines performed above expectations and there were notable recoveries at key points. The first of these was manufacturing, which had an advance of 7% compared to March 2020, something that was celebrated from different corners, such as the Ministry of Finance, headed by José Manuel Restrepo, and the Colombian Chamber of Clothing and Related (CCYA): “The important thing to highlight is that we see that positive figures began to appear, after three quarters of GDP with negative numbers, and one of the sectors that contributed to this growth was manufacturing,” said Camilo Rodríguez , your president.
Secondary activities, among which are manufacturing and construction, for example, had an advance of 24.9% in March, “the first time that there is a growth in the annual variation”, according to Juan Daniel Oviedo, director of DANE, who affirmed that “we also see a significant increase of 2.3% in the added value of this line compared to February, mainly due to the change in the trend in construction”.
Follow the news of El Espectador on Google NewsIt is worth saying that the construction sector had a growth of 32% in the annual variation of this month (that is, if we compare March 2020 and 2021), when in January and February it had shown negative values: -18.9 and – 17.3%, respectively. Sandra Forero, president of the Colombian Chamber of Construction (Camacol), highlighted that “in the building subsector the decrease of -2.2% is the lowest we have observed over the last year”, while celebrating the increases that have occurred in housing construction (26.2% per year).
In fact, in March, except for the mining and quarrying line, the rest of the 12 sectors that DANE monitors showed a performance equal to or higher than the historical average of the Economic Monitoring Indicator (ISE), which measures health of the national economy month by month.
Primary and tertiary activities (which group lines such as agriculture, commerce, transportation, among others) managed to reach the production levels recorded in February 2020, before the arrival of the pandemic, in March.
It is also worth saying that the contagion curve that today has the country plunged into a third peak began to grow precisely at the end of March, although its strengthening came fully in April.
The trimester and recovery
For the total of the first quarter, artistic and entertainment activities led the growth in annual variation (measurement against the same period last year), with 7.6%, followed by manufacturing industries (7%), financial and insurance activities (4.9%) and the line of public administration, defense, education and health (3.5%).
The quarter-on-quarter variation, that is, the one made compared to the last three months of 2020, shows an interesting outlook for certain aspects. “In general terms, the GDP results are showing a positive performance in the first quarter, compared to the immediately previous quarter, which is the comparison that must be made to assess whether a reactivation is taking place,” said Mario Valencia, a university professor , analyst and columnist for this newspaper.
Sergio Olarte, chief economist at Scotiabank Colpatria, stated that the figures indicate that “we are coming out of the recession” on account of sectors that have been able to better adapt to the new conditions of the economy with partial mobility restrictions and that had a greater expansion as expected.
However, for Valencia, “it is early to talk about the end of the recession, because growth continues to be affected by lockdowns and slow vaccination.” And he added that, in comparison with the last quarter of 2020, “it is not good news that one of the sectors that draws is mining, because it confirms that growth is occurring in an inertial way and supported by international prices. It is obvious that no economic policy reform has been made to produce the reactivation, which proves that the labor market continues to be very hit.
Rodríguez, from the CCYA, also expressed concern about the labor outlook by saying that “according to the DANE report on manufacturing production, the clothing subsector was the one that contributed the most to job losses within manufacturing companies. We need to regain confidence and economic dynamism to be able to get out of this gap in which we find ourselves ”. It is worth clarifying that unemployment has shown a series of ups and downs and in March the unemployment rate stood at 14.2%.
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For Restrepo, Minister of Finance, the 1.1% expansion “is a figure that exceeds all expectations that we had and that other economic authorities had for this period, therefore, it is great news.” The enthusiasm, however, is accompanied by concerns about the results of the blockades and the economic effects derived from the national strike.
All the unions, in addition to the Ministry of Finance, made a call to allow the transit of goods and to agree on disagreements. “As we have recently stated, Colombian citizens have been living a very complex situation related to the pandemic and its harsh economic effects. The ability of our economy to overcome difficulties should motivate the unemployment leaders and the National Government to build solutions to the situation of the moment ”, said Mac Master.
For its part, BBVA Research assured that “the lockdowns due to the pandemic that occurred in April and early May and, mainly, the economic effect of the protests in Colombia, could set back the dynamism that the economy brought at the close of the first trimester.
Added to this is the sharp drop in consumer confidence, which may halt some household spending decisions ”.
The recovery, which seemed to start more in shape in March, is indeed a major concern. Valencia ends by saying this about the reactivation: “I think it will be a slow process, with many obstacles to overcome. But, above all, if commercial and productive reforms are not carried out, the arrival point will not be a better economy, but the same one we had in 2019, which was already very bad ”.
