Newsletter # 20
International Allies
Bogotá, May, 2023
CONTENT
4.
4.1.
GUEST COLUMNIST
I wish to first thank the Bogotá Chamber of Commerce for the opportunity to, as its President, introduce the Ibero-American Association of Chambers of Commerce (AICO) and tell you about the issues we discussed at our latest meeting of the Board of Directors, held in Cascais (Portugal).
AICO, which is coming up to its 50th anniversary, has brought together Chambers of Commerce and related companies from 21 countries. Over the last two years, the number of members has increased by more than 50%, up to 86, and will be close to surpassing the 100-member mark as we celebrate our annual Assembly in Lima from October 22 to 24. I call out to and encourage that all Ibero-American Chambers of Commerce join us at this event. AICO is and will always be open to you.
At AICO we are working hard on increasing our recognition throughout the region, becoming a key player in promoting business between partners and companies, as well as promoting projects that will positively impact economic and social development within our geographical area of influence.
To do this end, we have developed several lines of work. Among them, holding business roundtables bringing together companies from throughout the region with the aim of fostering business between them; actions to promote deeper relationships between our partners by exchanging successful products and services; and arranging meetings of our work commissions to address issues of common interest to all countries, such as Social Responsibility, Tourism, Training or Business Development, which have great impact on our economies and society at large.
In this way, AICO helps to strengthen the capacities and services of its associates, as well as to boost business competitiveness.
Every year we hold meetings of the Board of Directors and the General Assembly, with presentations and conferences on current issues and in which our partners propose, debate and approve future strategic lines and action plans.
For example, the AICO Board of Directors meeting that we have just held in Cascáis (Portugal), in which more than 100 executives and companies participated, was focused on energy and ports and presented different solutions that Ibero-American countries are undertaking towards the energy transition, as well as highlighting the importance of logistics for business and economic development in our countries.
The Board approved, as a strategic action, developing a plan to engage African countries so that Ibero-American companies may carry out trade and investment projects in Africa, which will be led by the Portuguese Industrial Association (AIP) with the full support of AICO.
1. President of the Ibero-American Association of Chambers of Commerce (AICO)As in other parts of our lives, disputes also arise in the development of business activities. To resolve them, many chambers have an Arbitration Court, and we also rely on the Ibero-American Commercial Arbitration Commission (CIAC), as a facilitator in the resolution of international commercial disputes.
In short, AICO plays a very important role in promoting business throughout Latin America, and I take this opportunity to invite you once again to be part of it, as well as to attend our next General Assembly, which will be held in Lima (Peru) from October 22 to 24.
Thank you very much for your attention
2. GOOD NEWS FROM COLOMBIA AND THE BOGOTÁ-REGION
GOOD NEWS FROM COLOMBIA
• During his visit to Colombia, the senior diplomat James Cleverly, Secretary of State for Foreign and Commonwealth Affairs of the United Kingdom, announced the investment of 13 million pounds sterling to combat deforestation in the Colombian Amazon. The announcement took place at the meeting that Secretary Cleverly held with the Colombian Foreign Minister, Álvaro Leyva, in the Cerro Azul Natural Park, in the department of Guaviare. The investment announced by the UK will focus on tackling the main illegal drivers of deforestation and environmental crime in the region, as well as promoting sustainable livelihoods. For more information, visit the following link
• After obtaining admissibility in 2021, Colombia exported, for the first time, sugar mangos to the United States. The Ministry of Commerce, Industry and Tourism (MinCIT) announced that Colombia exported, for the first time, sugar mangos to Dallas, Texas, after a deal closed by a national company, Colfrutta, and Seasons Farm Fresh, an importer and distributor based in Miami, Florida, for the export of 6 thousand kilos of this fruit. For more information, visit the following link
• During the visit to Colombia of the Minister of State for Foreign Affairs of Saudi Arabia, Adel Al-Jubeir, this country announced its commitment to establish an Embassy in our country and make strategic investments to support the energy transition and the development of the health and agriculture sectors. Additionally, the Embassy of Saudi Arabia in Lima, concurrent with Colombia, reported that the Ministry of Education of its nation made several free scholarships available for the 2023-2024 school year for bachelor's, master's, and doctoral degrees in various specialties. For more information, visit the following link
• The Government of Colombia signed an agreement with Airbus to boost the aerospace industry and enhance technical and human skills in our country. The National Government and the European multinational Airbus, leader in the aerospace industry, signed a Memorandum of Understanding to revitalize the aerospace industry and enhance technical and human skills. This agreement will promote the triple helix concept (State, Industry and Academy) with clear social and industrial benefits from defense acquisitions. For more information, visit the following link
• The official visit of the Vice President of the Republic, Francia Márquez Mina, to South Africa, Kenya and Ethiopia was a success. Within the framework of the National Government's Africa 2022-2026 strategy, which has established the objective of deepening Colombia's ties with the African continent and strengthening SouthSouth cooperation, this mission ended leaving agreements for the country in terms of trade, education, transportation, culture, and empowerment of women, among others. A total of 17 cooperation instruments were signed, including the signing of a Memorandum of Understanding between the Bogotá Chamber of Commerce and the South African Association of Chambers (SAACI), which seeks to promote business between Bogotá-Region and South Africa. For more information visit the following link
GOOD NEWS FROM THE BOGOTÁ-REGION
• The country's capital, as the epicenter of development and innovation, will host the Smart City Expo Bogotá 2023, selected as part of the Smart City Expo World Congress (SCEWC) circuit, a world-class event that brings together business leaders, governments and the most innovative organizations to move cities towards a better future. Now the District is launching the Bogota High Impact Route, an opportunity for business growth in the city that aims to help micro and small businesses by strengthening innovation capabilities, access to financing, and connection to international markets. For more information, visit the following link
• Multidimensional poverty in Bogotá came down to 3.8%, the lowest number in the last 12 years. In this way, our capital is consolidated as the region with the least poverty in the country and shows the lowest social poverty since this indicator was launched in 2010. The above also represents a drop of more than 46% compared to 2019, so poverty in the capital was reduced, despite the pandemic. For more information, visit the following link.
3. BCC NEWS AND UPCOMING EVENTS
• From June 21 to 23, the 13th World Chambers Congress will take place in Geneva, Switzerland, organized by the World Chambers Federation (WCF). This year, the Congress, to which the CCB will lead a delegation of IberoAmerican and North American Chambers, will have multilateralism, digitization and sustainability as central axes. For more information, visit the official website of the 13th World Chambers Congress
• Under the leadership of Dr. Nicolás Uribe, executive president of the BCC and president of the ICC World Chambers Federation, our institution participated in the AICO Board of Directors meeting in Cascais, Portugal. During the session, a strategic plan was approved to engage the African market. Likewise, possible solutions to the energy crisis affecting Latin America and the African continent were discussed, as well as the importance of seaports for trade development. For more information, visit the following link
• The sixth edition of Bogotá Fashion Week was also a great success, where more than 110 independent design brands participated. From May 10 to 12, the sixth edition of Bogotá Fashion Week - BFW took place, a commercial and promotional platform for fashion organized by the Bogotá Chamber of Commerce (CCB), which
seeks to promote local independent designers through strengthening of participating brands, enabling business and engaging all manner of audiences with the work of these businessmen and women. In total, 14 fashion shows and 6 independent shows were held during the BFW 2023. For more information, visit the following link.
4. ECONOMIC DEVELOPMENTS
4.1. GROSS DOMESTIC PRODUCT (GDP)
During the first quarter of 2023, Colombia's GDP grew 3.0% compared to the same period of the previous year. This is 5.2 percentage points less than the 8.2% of first quarter of 2022; however, it was 0.9 percentage points higher than the fourth quarter of 2022.
This means the growth rate slowed down compared to the first half of 2022. Economic activities with the greatest share in gross value added for the first quarter of 2023 were wholesale and retail trade, public administration and defense, and the manufacturing industry, with a share of 20.64%, 14.5% and 12.56%, respectively.
Graph 1. Annual GDP growth rate, by quarter, between 2019 and 2023, Colombia and Bogotá
Source: DANE-SDDE
Bogota's GDP grew 4.7% in the fourth quarter of 2022, 5.0 p.p. less than in the third quarter, where the city grew by 9.7%, compared to 2020. Bogotá had a bi-annual growth in GDP of 17.8%. Finally, it is important to highlight that the data shows Bogotá performed better than Colombia in all quarters in 2022
4.2 INFLATION
In Colombia, monthly price variation in April 2023 was 0.78%, which indicates a decrease compared to the 1.25% registered in April 2022. On the other hand, the annual price variation increased significantly, going from 9.23% in April 2022 to 12.82% in April 2023, which indicates a high accumulated inflation for the last year.
Table 1. Monthly and annual inflation in Colombia and Bogotá for April 2022-2023
In Bogotá, the monthly price variation in April 2023 was 0.89%, which represents a significant reduction compared to the 1.29% registered in the same month of the previous year. On the other hand, the annual price variation in the city increased, from 8.11% in April 2022 to 12.82% in April 2023.
The data also shows that the year-to-year variation in Colombia and Bogotá in April 2023 continued to increase compared to the same month of the previous year. In Colombia, the year-to-date price variation fell from 5.66% in April 2022 to 5.38% in April 2023, while in Bogotá it increased from 5.38% in April 2022
4.3. LABOR MARKET
Employment has shown an improvement compared to the previous year. At the national level, the unemployment rate in March 2023 was 10.0%, 2.1pp lower than March 2022, and the employment rate rose 2.06pp over the last year, standing at 57.9% by March 2023. The global participation rate increased by 0.81pp, from 63.5% in March 2022 to 64.3% in March 2023. The foregoing is a good indicator of the improvement of the labor market, despite the fact that more people are participating in the labor market. As of March 2023, unemployment continued to decline.
Source: Large Integrated Household Survey, (GEIH), (DANE), March 2023
In Bogotá, the unemployment rate was 12.6% for the moving quarter Jan23-Mar23, 0.9pp more than the national unemployment rate for the same period. For the same quarter, the capital shows an occupancy rate of 59.7%, 3.4pp above the national occupancy rate for the same quarter. The data shows that although more people of working age are participating in the labor market in the capital (68.3%) than in the country (63.8%), unemployment is also higher than the national average.
The number of employed persons grew by 1.1 million from March 2022 to March 2023. Likewise, the number of unemployed persons decreased by 15.0%, which is 449,000 less unemployed persons. The perspectives on the number of employed persons are varied, since it is expected that the economic growth of 2023 will be less than in 2022.
In terms of labor market figures differentiated by sex, in March 2023 the gap in the unemployment rate between men and women was 4.98pp, 0.96pp less than in the same month of 2022. It is encouraging that as of March 2023 the gender gap has been reduced with the improvement of the labor market and the decrease in national unemployment. Finally, it is important to highlight that for both men and women the unemployment rate decreased compared to March 2022; and also, that the global participation rate in March 2023 was much higher in men than in women, while the GPR for men was 77.2%, for women it was barely 52.5%. Therefore, there are still many challenges regarding inclusion of women in the labor market.
5. EVOLUTION OF FOREIGN TRADE EXPORTS
In March 2023, Colombian exports also suffered a decrease compared to the same month of the previous year. Likewise, a decrease in exports from Bogotá and Cundinamarca was observed. Bogotá had a negative variation of
-13.96%, while Cundinamarca registered a decrease of -3.42% compared to March 2022. This data reflects a change in the previously observed positive trend. When comparing March 2023 with February 2023, an improvement in export performance was seen for both Bogotá and Cundinamarca; Bogotá experienced an increase in exports of 2.9%, while Cundinamarca showed an increase of 2.2% in the last month.
The variability in the export data for Bogotá and Cundinamarca throughout the period indicates that these regions are sensitive to market changes and may experience significant fluctuations in their exports.
Source: DANE, International Trade
In March 2022, exports from Bogotá reached $1.03 billion FOB dollars, while Cundinamarca registered $674.5 million FOB dollars. These figures represent an increase of 40.09% and 33.30% respectively, compared to March 2021. Both regions showed solid growth in their exports during that period.
However, in March 2023, a decrease in exports from Bogotá and Cundinamarca was observed. Bogotá recorded $887.8 million FOB dollars, which represented a decrease of 13.96% compared to March 2022. Cundinamarca, for its part, reached $711.2 million FOB dollars, with a variation of 5.44% for the same period. This data reflects a negative change in Bogota's export performance, which impacts the entire region. In summary, in March 2023, Bogotá and Cundinamarca experienced a decline in their exports, but Bogotá registered a steeper drop than Cundinamarca.
In March 2023, total exports from Colombia reached $4.46 billion FOB dollars. Bogotá contributed $330.5 million FOB dollars, while Cundinamarca contributed $257.9 million FOB dollars. Compared to March 2022, Colombia's total exports showed a decrease of 10.18% Bogotá also experienced a reduction in its exports, with a negative annual variation of 13.97%. For its part, Cundinamarca registered a drop of 3.42% in its exports.
Graph 2. Annual variation of Colombian exports in Bogotá and Cundinamarca 2021-2023In absolute terms, Bogotá underperformed in March 2023, with a decrease of $53.65 million FOB dollars compared to the same month of the previous year, while Cundinamarca also showed a decrease in its exports, with a negative variation of $9.1 million FOB dollars. In aggregate terms, the Bogotá-Cundinamarca region had a 43.83% share of the nation's imports in March 2023.
Total exports from the Bogotá-Cundinamarca region reached $588.43 million FOB dollars, and it was the United States that stood out as the main export destination, with $222.4 million FOB dollars, which represents a 37.79% share of the general total of exports. In second place is Mexico, with exports worth $52.4 million FOB dollars, which is equivalent to 8.9% of the total share; followed by Ecuador, with $29.1 million FOB dollars and a share of 4.95%.
Peru and China rank fourth and fifth, respectively, in terms of exports from Bogotá-Cundinamarca. Peru recorded exports of $27.9 million FOB dollars, representing 4.74% of total exports, while China reached $27.6 million FOB dollars, with a share of 4.69%. Finally, although exports are not too concentrated to a single destination, it is essential to strengthen and diversify exports to other markets to boost economic growth in the region in the future.
IMPORTS
In March 2023, total imports into Colombia totaled $5.85 billion CIF dollars. Imports into Bogotá had a value of $2.99 billion CIF dollars for March 2023, which represents a 12% decrease compared to the same month of the previous year; even so, Bogotá continues to be one of the main cities receiving imports in Colombia.
For its part, Cundinamarca registered imports worth $442 million CIF dollars in March 2023, showing a significant decrease of 24% compared to March 2022. This drop can be attributed to various economic and commercial factors.
Regarding the Bogotá-Cundinamarca region, which includes Bogotá and Cundinamarca as a whole, imports reached $3.4 billion CIF dollars in March 2023. This represents a 14% decrease compared to the same month of the previous year. Bogotá maintained its position as one of the main recipients of imports in Colombia, with a share of 51.1% of the national total, while Cundinamarca received a share of 7.6%
Graph 3. Imports into Colombia, Bogotá and Cundinamarca (March 2022The United States was positioned as the main country of origin of imports, with a value of $970.63 million CIF dollars and a share of 28.26% with respect to the general total. China ranked second, with imports worth $648.91 million CIF dollars, representing 18.89% of the total share. Brazil and Mexico also stood out as significant source countries, with imports worth $227.62 million CIF dollars and $209.45 million CIF dollars, respectively. Other important countries in terms of imports for the Bogotá-Cundinamarca region include Germany with $187.46 million CIF dollars, Argentina with $114.77 million CIF dollars, and Spain with $106.55 million CIF dollars.
In summary, during March 2023, imports into the Bogotá-Cundinamarca region were led by the United States and China as the main countries of origin. These countries represented a significant proportion of the region's total imports, highlighting the importance of trade relations with these partners. It is important to diversify imports from other countries and continue to strengthen trade ties with these and other markets.
6. FOREIGN DIRECT INVESTMENT
According to the Ministry of Commerce, Industry and Tourism of Colombia, Foreign Direct Investment (FDI) stood at US $ 4.8 billion in the accumulated total for the year to April. This means an increase of 19.6% compared to the same period (January-April) of the previous year.
For its part, investment in the oil and mining sector stood at US $3.93 billion for the January-April period, increasing by 50.3% compared to the same period in 2022. As for sectors other than oil and mining, FDI amounted to US$866 million accumulated as of April, an increase of 18% compared to the same period in 2022. In total, FDI in the miningenergy sector represented 82% of the investment received so far for the year.
Graph 4. Foreign Direct Investment. January-April (2015-2023) Source: Banco de la República-Exchange balance from the Ministry of Commerce, Industry and Tourism. April 20237. SOURCES
• For more information, refer to the Observatory of the Chamber of Commerce of Bogotá https://www.ccb.org.co/observatorio
• DANE. National accounts. Retrieved from: https://www.dane.gov.co/index.php/estadisticas-por-tema/cuentasnacionales/cuentas-nacionales-trimestrales
• DANE. Labor Market. Retrieved from: https://www.dane.gov.co/index.php/estadisticas-por-tema/mercadolaboral/empleo-y-desempleo
• Commercial Registry, CCB, 2019 - 2020 – 2021 - 2022 Retrieved from: https://www.ccb.org.co/Inscripcionesy-renovaciones/Matricula-Mercantil/Boletines-del-Registro-Mercantil/Boletines-ano-2021
• DANE. Social Pulse survey Retrieved from: https://www.dane.gov.co/index.php/estadisticas-portema/encuesta-pulso-social
• DANE, Exports. February- April. Retrieved from: https://www.dane.gov.co/index.php/estadisticas-portema/comercio-internacional/exportaciones.
• DANE, International trade imports April 2023. Retrieved from: https://www.dane.gov.co/index.php/estadisticaspor-tema/comercio-internacional/importaciones
• Ministry of Commerce, Industry and Tourism. Foreign Direct Investment Reports Retrieved from: https://www.mincit.gov.co/estudios-economicos/estadisticas-e-informes/informes-de-inversion-extranjera
• Bogota Economic Development Observatory Retrieved from: https://observatorio.desarrolloeconomico.gov.co/expectativas/indice-de-confianza-industrial-vuelve-terrenopositivo