XXV COLOMBIA NEWSLETTER International Allies Bogotá D.C., October, 2023 CONTENTS 1. Guest Columnist 2. Good news about Colombia and Bogotá-Region 3. Bogotá Chamber of Commerce News and Events 4. Economic Outlook 4.1. 4.2. 4.3. 4.4.
Economic Monitoring Indicator Inflation Business Dynamics Employment
5. International Trade 6. Foreign Direct Investment 7. Sources
1. GUEST COLUMNIST
Greetings to our international allies from Mr. Ovidio Claros, new executive president of the Bogotá Chamber of Commerce It is an absolute pleasure for me to greet, for the first time since my appointment as Executive President of the Bogotá Chamber of Commerce (CCB) on October 2, our esteemed network of international allies. I want to take advantage of this valuable channel offered by our monthly Newsletter to share a few short words about what our priorities at the head of the CCB will be and how we hope to work closely with each of you. Assuming the presidency of the Bogotá Chamber of Commerce is, without a doubt, a great honor and a challenge that I face with enthusiasm and commitment. In my more than 37 years of public and private service, I’ve had the opportunity to act in the many difficulties that the business sector has faced. For this reason, I receive the 145 years of institutional work of the CCB with the certainty that from the executive presidency, we will be able to contribute to continue growing and supporting all the businessmen and women in the country. I will work to make everyone's desire possible: make transformations and generate new realities for commerce in Bogotá and the region. To achieve the above, we have set ourselves ambitious but clear goals. One of our main objectives will be to promote the creation of a special fund that provides seed capital to encourage and support ventures and entrepreneurs that need a boost for their development. This will include environmental and social projects, reinforcing our commitment to sustainability and positive impact on society. Likewise, we will establish a support program for vulnerable groups: people with disabilities, ethnic minorities, and young entrepreneurs. We seek to consolidate an inclusive Chamber of Commerce that analyzes the conditions of each user, applying a gender and differential approach in all our initiatives to guarantee equal opportunities. We will also focus our efforts on improving the access conditions of our businessmen and women to technology and innovation through strategic alliances focused on shopkeepers, merchants, entrepreneurs, and MSMEs. With the latter, we seek to reduce costs and improve business models to allow more significant income generation. Moreover, we will focus our efforts on providing the most effective and earliest services for all companies. We will continue to generate tools for the support and training of citizens so that they can have their own instruments to strengthen their companies, starting with education, for which we will strengthen the Business University Foundation (Uniempresarial) with relevant and quality programs. We will promote the 99% of MSMEs that make up the business ecosystem of Bogotá-Region. We will direct our services to strengthen these smaller units, not only to boost business creation but also the sustainability and prosperity of those companies that do not survive after the first five years of operation. To do this, we will facilitate access to credit and promote the development of low-cost financing programs.
Of course, in this path to strengthening the base of the pyramid, much of our efforts will focus on its internationalization. We will promote their participation in regional value chains and bring them closer to clients in all parts of the world, but especially with non-traditional trade partners for our country, such as the African continent, and promote the diversification of our export basket to reduce its dependence of mining-energy products and promote the export of goods and services with high added value. And it is in this purpose that our close work with each of you will take on vital importance. Likewise, we will decisively contribute to the purpose of improving the opportunities and conditions of each citizen who moves commerce. The CCB will continue to work in the same way it has always done, as a consulting and advisory body to the national government, contributing to the achievement of the objectives set for the development of the social and business fabric defined in the National Development Plan 2022-2026. As an example, we will participate in the National Council of Popular and Solidarity Economy established by said Plan, and, by provision of Article 98, we will allocate resources to cover part of the financing of programs within the framework of the reindustrialization, foreign trade and tourism policies defined by the Ministry of Trade, Industry, and Tourism. However, we will also direct our forces to the implementation of strategies that promote collective work to strengthen our country, its prosperity from the economy, and the training of citizens in alternative methods of dispute resolution, thus enabling the social programs that have given so much benefit and that the Chamber of Commerce has implemented for many years. Finally, we will conceive the entity as a district, departmental, and national unit. This means that we will put strategic lines at the center, such as the regional transportation agency and authority, which will be fundamental for the development of greater regional infrastructure that guarantees the mobility of passengers and cargo, and thus, we can increase the competitiveness and productivity of our business sector. Likewise, in a region that concentrates 13% of the country's wastelands, we will promote environmental protection and sustainability, working to combat the effects of climate change. No less important, we will also work for food security, ensuring the production, access, and use of food. I want to reiterate that the Bogotá Chamber of Commerce is determined to be an engine of change and development for the region and the country. Our goals are ambitious, but with the support of businesses, the government, civil society, and, of course, all of you, our international allies, we are confident that we will be able to transform the commercial landscape and create a prosperous future for all. Together, we will build a stronger and more prosperous Bogotá and Colombia. Mr. Ovidio Claros Polanco Executive Presidente, Bogotá Chamber of Commerce
2. GOOD NEWS ABOUT COLOMBIA AND BOGOTÁ-REGION
COLOMBIA NEWS • The first exports of Colombian beef to China will occur in the first quarter of 2024. As announced by the country's Minister of Agriculture and Rural Development, through negotiations with the Chinese authorities, they dispensed with the visit to Colombia to proceed with the signing of the protocol. By omitting this step, the remaining procedures are speeded up: formalization of the export zoo sanitary certificate and registration with Invima (Colombia’s Food and Drugs Administration) by exporting companies that wish to export to this Asian giant. For more information, see the following link. • The new cruise season in Colombia will have an economic impact of close to 50 million dollars. According to the study “Economic Contribution of Cruise Tourism to the Destinations Economies,” carried out by Business Research & Economic Advisors (BREA), the 2023-2024 cruise season brings good news for Colombia in terms of income generation, as it is expected to have an economic impact close to 50 million dollars. For more information, see the following link. • Two municipalities in Colombia were recognized by the World Tourism Organization (UNWTO) among the main destinations in the world for rural tourism. Within the framework of the 25th General Assembly of the UNWTO, the Colombian municipalities of Zapatoca and Filandia received the recognition of the Best Tourism Villages 2023. In this annual contest, promoted by the UNWTO to recognize the best towns for rural tourism, more than 260 municipalities from 60 countries participated. For more information, see the following link.
BOGOTÁ-REGION NEWS
• Bogotá has a new public policy for the inclusion and development of migrants. “The Public Policy for the Reception, Inclusion, and Development of the New Bogotans” is the result of the articulated effort of the district entities and the support of international cooperating organizations such as the United States Agency for International Development (USAID), the World Bank, the Embassy of Canada and the German Technical Cooperation (GIZ). The newly approved roadmap has an approximate investment of COP $2.8 billion for its execution over the next 12 years and guarantees migrants' access to education, health, work, and decent housing, among other services. For more information, see the following link. • Bogotá and Copenhagen sign Memorandum of Understanding for environmental sustainability. Within the framework of the III P4G Colombia 2023 Summit, the mayor of Bogotá, Claudia López Hernández; the Danish ambassador to Colombia, Erik Hoeg; and the Mayor of Copenhagen, Sophie Hæstop Andersen, signed a Memorandum of Understanding to establish lines of cooperation on issues of sustainable urban development and mitigation and adaptation to climate change. For more information, see the following link.
• On October 2, REMtech 2023 took place in Bogotá. On its fourth edition, the event had the participation of promoters, construction companies, business leaders, corporations, technological solutions, startup founders, professionals, and managers of commercial real estate to learn up close about the changes in the industry. For more information, see the following link.
Bogotá and the International Film Festival join forces to promote creative industries in the capital. To promote and support the creative industries market as a potential development cluster, the Secretariat of Economic Development and Bogotá International Film joined forces for this purpose, which also seeks to position the Colombian capital as a tourist and industry destination. international cinema. For more information, see the following link. 3. BOGOTÁ CHAMBER OF COMMERCE NEWS AND EVENTS
•
The Executive President of the CCB, Dr. Ovidio Claros Polanco, meets with the Ministry of Trade and the National Planning Department to agree upon a roadmap to strengthen business development in the region. In full coordination with the National Development Plan 2022-2026, joint actions were defined to promote the industrial and business development of the country's capital and the municipalities of the department of Cundinamarca surrounding the city. This work will be developed by strengthening the business capabilities of micro, small and medium-sized businesses, as well as the popular economy. For more information, see the following link.
•
We hold a Colombia-Dubai Business Opportunities Forum. The Bogotá Chamber of Commerce and the Dubai Multi Commodities Center (DMCC) invite you to participate in the forum "Business opportunities in Colombia - Dubai". The event will take place on October 26, at the Chapinero Headquarters and Business Center, located at Carrera 67 # 8-32. The objective is to share the opportunities that this market offers to the business community of Bogotá and the region for the internationalization of their products and services. For more information, see the following link.
•
The CCB hold holds a webinar on multi-sector trade opportunities with Uruguay. The Bogotá Chamber of Commerce and the Embassy of the Eastern Republic of Uruguay in Colombia invite you to connect to this webinar where you will have the opportunity to learn about the panorama of business opportunities that the Uruguayan and Colombian market offers for the business fabric of both countries. The event will take place on October 24 from 8:00 to 10:00 a.m. For more information, see the following link.
4. ECONOMIC OUTLOOK
4.1. ECONOMIC MONITORING INDICATOR According to the Economic Monitoring Indicator (ISE in Spanish) in 2022 and 2023, monthly growth has ranged between -2% and 2% as seen in Graph 1. In August 2023, the ISE recorded a monthly growth of 0.8%, which represents progress in economic dynamics compared to the previous month. Graph 1. Monthly growth of the Economic Monitoring Indicator
Source: DANE, 2023
In August 2023 the ISE showed an upward trend, which meant a change in trend compared to the month of July where it decreased 0.8%. The activities that showed the greatest monthly growth of the ISE in August 2023 were Supply of electricity, gas, steam, and air conditioning with 2.6%, Manufacturing industries with 1.7% and Information and communications with 1.6%. In terms of annual growth, public administration and defense activities were the ones that showed the greatest growth in the ISE with 8.0%. Likewise, the activities with the greatest annual decline in the economic monitoring indicator in the last year have been manufacturing and construction, with an annual variation of -7.0% for August 2023. In summary, the ISE of Colombia has experienced an advance in August 2023 compared to July 2023, indicating a change in trend in the economy. The ISE is 0.2% higher than in August 2022. 4.2 INFLATION Colombia and Bogotá experienced a decrease in the monthly price variation in September compared to the same month of the previous year. In September 2022, the monthly variation in Colombia was 0.93% and in Bogotá 0.95%, while, in September 2023, it was reduced to 0.54% and 0.61%, respectively. This decrease indicates lower inflationary pressure in the Colombian economy.
Table 1. Monthly and annual information in Colombia and Bogotá during September 2022-2023 Monthly Variation
Year-to-date variation
Yearly Variation
Period Colombia
Bogotá
Colombia
Bogotá
Colombia
Bogotá
sept-22
0,93
0,95
10,08
9,39
11,44
10,42
sept-23
0,54
0,61
8,01
8,35
10,99
11,29
Source: DANE-Consumer Price Index (CPI)
It is observed that the year-to-date variation in Bogotá has exceeded that of Colombia in the same period. As of September 2023, the year-to-date variation in Bogotá was 8.35%, while that of Colombia was 8.01%. This indicates that the capital has experienced inflationary behavior slightly higher than the national average during that time. For its part, the annual price variation in Colombia decreased from 11.44% in September 2022 to 10.99% in September 2023, while the annual price variation in September 2023 in the capital shows an increase of 0.87 percentage points compared to the same month of 2022, going from 10.42% to 11.29%. The price variation data by spending division in Colombia and Bogotá for September 2023 show that it was the Education spending division that drove inflation this month, presenting variations of 1.79% and 2.64% respectively. The alcoholic beverages and tobacco spending division rose 1.15% in Bogotá and 0.82% in Colombia, while the food and non-alcoholic beverages division rose 0.89% in Bogotá and 0.74% in Colombia. Finally, the only spending division that presented a negative variation in Bogotá was Recreation and culture with -0.12%. 4.3. BUSINESS DYNAMICS In the month of September 2023, the data shows an increase in the number of active companies in the jurisdiction of the Bogotá Chamber of Commerce compared to previous years. An overall growth of 0.86% is observed in total active companies for September 2023 compared to the same month in 2022. This represents an increase of 4,012 companies in one year. When analyzing the participation of companies by legal order in September 2023, most of the registered companies belong to Physical Persons, with a total of 264,694 companies, which represents 56.5% of the total active companies in the jurisdiction of the Bogotá Chamber of Commerce. On the other hand, Legal Persons reached a total of 203,629, which represents 43.5% of the total active companies in the same jurisdiction.
Regarding the annual variation, it is highlighted that the Legal Person category experienced a growth of 2.2% in the number of active companies between September 2022 and September 2023, while the variation for Physical Persons was -0,1%. Graph 2. Evolution of active companies between 2021 and 2023 for the January-September period by size Number of Active Companies % Variation Variation participation 2021 - 2023 2022 - 2023 September 2023
Size
sept-21
sept-22
sept-23
Micro
399.624
428.156
432.940
8,3%
1,1%
92,4%
Small
24.994
25.300
24.658
-1,3%
-2,5%
5,3%
Medium
7.370
7.401
7.306
-0,9%
-1,3%
1,6%
Larga
3.464
3.454
3.419
-1,3%
-1,0%
0,73%
Total, CCB Jurisdiction
435.452
464.311
468.323
7,5%
0,9%
100%
Source: Business Registry, 2021-2022-2023
When analyzing the participation of companies by size in September 2023, it is highlighted that Microenterprises represent most of the business fabric, with a total of 432,940 companies, which is equivalent to 92.4% of the total active companies in the jurisdiction of the Bogotá Chamber of Commerce; while Small Businesses constitute 5.3% of the total, with 24,658 companies. On the other hand, Medium Companies represent 1.6%, with 7,306 companies, while Large Companies make up 0.7% of the total, with 3,419 companies. In terms of annual variation in the number of active companies compared to September 2022, Microenterprises had a growth of 1.1%, while Small Businesses experienced a decrease of -2.5%. For their part, Medium Companies fell -1.3%, while Large Companies registered a decrease of 1.0%. 4.4 EMPLOYMENT Employment has shown an improvement compared to the previous year. At the national level the unemployment rate in August 2023 was 9.3%, 1.3pp lower than August 2022. Likewise, the employment rate has increased 1.7pp in the last year, standing at 58.5% by August 2023. The global participation rate increased by 0.9pp, going from 63.5% in August 2022 to 64.4% in August 2023. Even though more people are participating in the labor market, in August 2023 unemployment remained lower than in the same month of the previous year.
Table 2. TGP, TO y TD, Colombia
Aug-22
Aug-23
Difference (pp)
Global Participation Rate
63,5
64,4
0,9
Occupancy Rate
56,7
58,5
1,7
Unemployment Rate
10,6
9,3
-1,3
Rates
Source: Large Integrated Household Survey – GEIH (DANE). August 2023 In the case of Bogotá and its metropolitan area, the unemployment rate was 9.2% for the moving quarter June23-Aug23, lower than the 9.4% of the national total for the same period. For the same quarter, the capital shows an occupancy rate of 63.5%, 5.0pp above the national occupancy for the same quarter. The data shows that more people of working age are participating in the labor market in the capital (69.9%) than in the country (64.5%). The employed population grew by 1.0 million people from August 2022 to August 2023. Likewise, the number of unemployed people decreased 10.2%, which means 268 thousand fewer people in a nonemployed condition. The perspectives on the number of employed people are multiple, since economic growth in 2023 is expected to be lower than that presented in 2022. 5. INTERNATIONAL TRADE
EXPORTS In August 2022, Colombia experienced a growth in its exports of 37.79% compared to the same month of the previous year. However, Bogotá showed a decrease of 0.35% while Cundinamarca registered an increase of 36.71%. A year later, in August 2023, Colombia experienced a 10.07% decrease in its exports compared to August 2022, indicating a slowdown. Bogotá, on the other hand, achieved a modest increase of 0.39%, in contrast to Cundinamarca, which saw a decrease of 20.08%.
Graph 3. Annual variation in exports of Colombia, Bogotá, and Cundinamarca 2021-2023
Source: DANE, Exports.
In August 2023, Colombia experienced a decrease in its exports, falling to $3,946.91 million FOB dollars. In contrast, Bogotá maintained growth, reaching $329.69 million FOB dollars. Finally, Cundinamarca experienced a decrease in its exports, reaching $178.42 million. The positive trend in the capital's exports stands out, as it almost doubled the value of the exports of the rest of the department of Cundinamarca. On this month, total exports from the Bogotá-Cundinamarca region reached $508.11 million FOB dollars. The United States stood out as the main destination of exports, with a total of $173.25 million FOB dollars, which is equivalent to 34.10% of the general total. Ecuador ranked second on the list of export destinations with $66.96 million FOB dollars, representing 13.18% of the total. Peru and Mexico also stood out as relevant destinations with $32.36 million (6.37%) and $26.55 million (5.23%) respectively. Chile and Venezuela contributed $15.98 million (3.15%) and $15.32 million (3.02%), respectively, to the region's exports. Turkey, Canada, Panama, and Argentina also played a notable role in exports, with values of $11.69 million (2.30%), $11.64 million (2.29%), $11.15 million (2.19%), and $10.39 million (2.04%) respectively. Exports to other countries represented $132.83 million FOB dollars, constituting 26.14% of the overall total, a significant contribution in terms of share in the month of August. IMPORTS In July 2023, Colombia's total imports reached $4,945.2 million CIF dollars, experiencing a decrease of 28.2% compared to July 2022. In contrast, Bogotá showed growth in its imports, reaching $2,446.3 million CIF dollars in July 2023, representing an increase of 55.9% compared to the same month of the previous year. Bogotá's participation in national imports also increased, going from 22.77% in July 2022 to 49.47% in July 2023.
Cundinamarca, for its part, experienced a moderate increase in its imports, reaching $405.9 million CIF dollars in July 2023, which is an increase of 10.5% compared to July 2022. Cundinamarca's share in National imports also increased, going from 5.3% to 8.2% in the same period. The Bogotá-Cundinamarca region, recorded a growth in its imports, reaching $2,852.3 million CIF dollars in July 2023, which represents an increase of 47.3% compared to the same month of the previous year. The share of this region in national imports also increased, going from 28.1% in July 2022 to 57.68% in July 2023. In July 2023, the Bogotá-Cundinamarca region recorded imports totaling $2,852.25 million CIF dollars. Graph 4. Imports from Colombia, Bogotá, and Cundinamarca (July 2022-2023)
Fuente: DANE, Imports.
The country's main trading partners were the United States and China. The United States led with $651.48 million CIF dollars, representing 22.84% of the total, closely followed by China, which contributed $635.47 million CIF dollars, representing 22.28% of the total. These two countries represent almost half of all imports (45.12%). Brazil, with $206.55 million CIF dollars, ranked third in importance, contributing 7.24% of the total. Mexico and Germany also played a relevant role, contributing $160.14 million (5.61%) and $119.7 million (4.2%) respectively. France and Argentina reached $84.9 and $77.7 million CIF dollars respectively, while India, Japan and Belgium presented contributions of $74.0, $63.6, and $61.7 million CIF dollars. Finally, the "Other countries" contributed $717.07 million CIF dollars, which represents 25.14% of the region's total imports. This underlines the diversity of import sources beyond the main partners mentioned.
6. FOREIGN DIRECT INVESTMENT
During the second quarter of 2023, the country received a total of US $5,278 million in Foreign Direct Investment, equivalent to 6.2% of the quarterly GDP. These resources were higher by US$ 157 m compared to the same period in 2022 and by US$ 996 m compared to the immediately previous quarter. Graph 4. FDI Flows by Trimester
Source: Banco de la República Regarding FDI flows by country of origin, during the second quarter of 2023 resources came mainly from: United States (US$ 1,730 m), Anguilla (US$1,398 m), Spain (US$ 600 m), England (US$ 483 m), Switzerland (US$ 294 m), Netherlands (US$ 130 m), Virgin Islands (US$ 130 m), and Peru (US$ 121 m). The annual increase in FDI (US$ 157 m) is mainly explained by the higher investments received from Anguilla, the United States, England, Mexico, Uruguay and Luxembourg, partially offset by the lower investments from Panama, Chile, the Cayman Islands and Spain.
7. SOURCES
• Please refer to the Bogotá Chamber of Commerce’s Economic Observatory for further information: https://www.ccb.org.co/observatorio • DANE. National Accounts. Recovered from: https://www.dane.gov.co/index.php/estadisticas-portema/cuentas-nacionales/cuentas-nacionales-trimestrales • DANE. Labor Market. Recovered from: tema/mercado-laboral/empleo-y-desempleo
https://www.dane.gov.co/index.php/estadisticas-por-
• Business Registry, CCB, 2019 - 2020 – 2021 – 2022 - 2023. Recovered from: https://www.ccb.org.co/Inscripciones-y-renovaciones/Matricula-Mercantil/Boletines-del-RegistroMercantil/Boletines-ano-2021 • DANE. Social Pulse Survey. Recovered from: https://www.dane.gov.co/index.php/estadisticas-portema/encuesta-pulso-social • DANE, International Trade. Recovered from: https://www.dane.gov.co/index.php/estadisticas-portema/comercio-internacional