Newsletter #11 International Allies Bogotá, June, 2022
CONTENT 1. Guest Columnist 2. Good News from Colombia 3. Economic Developments 3.1. 3.2. 3.3. 3.4.
Gross Domestic Product Inflation Labor Market Business Dynamics
4. Evolution of Foreign Trade 5. Foreign Direct Investment 6. BCC News and Upcoming Events 7. Sources
1.
Guest Columnist
I have always believed that by working together we can achieve the necessary changes to make this world better, more equitable and with opportunities for all. When I became a businesswoman, I found that there were other entrepreneurs like me, willing to donate their talent, knowledge, time and resources led by the belief that fostering and promoting world trade and eliminating all existing trade barriers, will allow for the benefits of trade to materialize for the world´s entire population. I am convinced that promoting investment, open markets for goods and services, and the free movement of capital to any part of the world is a matter of common interest to all businesspersons, and that is why conflict resolution, policy enactment and solving practical problems will only be possible if we all work together. This is evident for millions of companies around the world, through the daily use of INCOTERMS, the ICC AntiCorruption Rules, and the UCP600, to cite just a few examples of how the ICC contributes to trade by providing practical solutions. The ICC, however, also collaborates in public policy drafting, such as in eliminating double taxation for international companies, as was recognized a few months ago by the University of Oxford in its "Journal of International Economic Law", which, in its March edition, included an article on the different strategies that the ICC has used, since its foundation in the 1920s, to achieve greater collaboration between companies and the public sector. It is undoubtedly a great honor, but also a great responsibility, to assume the presidency of this organization at a time when advocating for free trade is more important than ever. The challenges are titanic and, given the extraordinary circumstances we are facing, such as climate change, generalized inflation, or disruptions in value chains and food shortages, the role of trade will be vital to be able to push through. We will continue to work together with ICC National Committees around the world, and the Chambers of Commerce affiliated to the World Federation of Chambers, to keep markets open and fulfill the ideals of the ICC. María Fernanda Garza President of the International Chamber of Commerce (ICC)
2.
Good News from Colombia
Good News from Colombia • On June 19, the second round of the presidential elections took place in Colombia. The winner and next president of the Republic for the 2022-2026 period will be Senator Gustavo Petro, candidate for the Historical Pact party. For more information, please visit the following link. • President elect, Gustavo Petro, announced the appointment of José Antonio Ocampo as Minister of Finance and Public Credit. Ocampo is an economist from the University of Notre Dame (USA) and a doctor in Economics and Political Science from Yale University, and is a professor at Columbia University, in addition to having been Executive Secretary of the Economic Commission for Latin America (CEPAL) and Assistant Secretary General of the United Nations for Economic and Social Affairs, among others. For more information, please visit the following link. • During May, Colombia recovered 100.7% of the jobs lost due to the COVID-19 pandemic. The unemployment rate for the month was 10.6%, which shows a sustained reduction in unemployment in our country. For more information, please visit the following link. • On June 30, after more than 840 days, the Public Health Emergency in Colombia caused by the COVID-19 pandemic was lifted. This was in part due to the fact that more than 83% of the population has at least one dose of the COVID vaccine and more than 70% have their full vaccination scheme. For more information, please visit the following link. • In its most recent estimates, the Organization for Economic Cooperation and Development (OECD) announced that Colombia will be the member country with the highest economic growth in 2022, with 6.1%. For more information, please visit the following link. • On June 13, Colombia joined the Global Trade and Gender Arrangement. This body, made up so far by Canada, Chile, Mexico and New Zealand, aims to improve women's access to international trade. For more information, please visit the following link. • After completing all required internal procedures, as of June 28, Colombia's trade agreement with the United Kingdom entered into force. It is important to remember that this agreement, signed in May 2019, was brought forward to preserve the trade conditions that existed between the two countries within the framework of the Free Trade Agreement with the European Union, which the United Kingdom was a part of until December 31, 2020. For more information, please visit the following link.
• On June 17, the second No VAT Day was held in Colombia. Sales during the day exceeded COP 10.61 billion, which represents an increase of 16.6% compared to the first such day in March. This is measure is designed to promote economic recovery in our country´s business sector. For more information, please visit the following link. Good News from Bogotá • During the first quarter of 2022, Bogotá's economic output grew by 11.5%, an increase compared to 2019, which places the capital´s economy above the levels registered before the economic crisis generated by the COVID-19 pandemic. For more information, please visit the following link. • “Go Fest”, the most important Entrepreneurship Festival in the Colombian capital was held between June 15 and 17, organized by the Bogotá Chamber of Commerce. This fifth edition, the first held in person since the start of the pandemic, brought together more than 12,000 attendees to more than 20 national and international conferences, where they were also able to learn about new ventures at the XVIII Young Entrepreneurs Fair, among many more activities. In addition, this edition featured Israel as the guest of honor country. For more information, please visit the following link. • Bogotá was recognized as the Nearshore City of the Year in Latin America and the Caribbean by the most recent edition of the Nexus Illuminate Awards. This award recognizes the large flow of investments to the city, the significant available government incentives, salary competitiveness and the wide range of qualified talent in Bogotá. For more information, please visit the following link. • The capital's Inclusive Employment Roundtable was held between June 29 and 30, organized by the Bogotá Chamber of Commerce. More than 80 local companies participated in this event, which aims at reducing employment gaps for women, young people, people with disabilities and sexually diverse people, offering more than 10,000 job vacancies. For more information, please visit the following link. • The Bogotá Mayor's Office and IBM signed an understanding agreement to train more than 10,000 people in professional skills and emerging technologies such as cloud computing, artificial intelligence, cybersecurity, data science and the Internet of Things, among others. For more information, please visit the following link.
3.
Economic Developments
3.1 Gross Domestic Product (GDP)1 The DANE published quarterly results for Gross Domestic Product growth in Bogotá during the first quarter of 2021. The capital's GDP grew by 11.5% in the first quarter of 2022 compared to the first quarter of 2021. But, more importantly, a growth of 12.3% was observed when compared with the first quarter of 2020 and 13.7% compared to the same period of 2019. This shows the full recovery of the capital´s economy, which is expected to show positive figures for the rest of the year. Graph 1. Annual growth rate of the Gross Domestic Product, per quarter, between 2019 and 2022 for Bogotá and Colombia
3,5% 3,8% 3,7% 3,9%
1,2%
2,3% 3,0% 3,2% 3,0% 0,8%
-3,6% -8,8% -15,5% -7,7%
I
II
III
IV
2019
I
-16,6% II III
18,3% 13,7% 11,6%11,5% 17,7% 12,9% 0,9% 10,8% 8,5% 0,8%
-3,6%
IV
I
2020p Colombia
II
III
2021pr
IV
I 2022
Bogotá
Source: DANE. Directorate of Synthesis and National Accounts. Constant prices based on 2015.
1
Source: DANE, National accounts. Published on May 15, 2022
3.2 Inflation Price variation in the country was 0.84% and 0.82% in Bogotá for May 2022. These results for May, combined with those for January and April, placed national inflation for the first five months of the year at 6.55%, and at 6.22% for Bogotá. For context, the Central Bank´s projections in its monetary policy report for May 2022 showed it expected inflation closing at 7.1% for 2022. This means that 92.2% of the projection expected by the Central Bank for the entire year has already materialized in the first five months.
Table 1. Monthly and year-to-date inflation in Colombia and Bogotá during May 2022. Monthly variation
Variation to date
Annual variation
Period Colombia
Bogotá
Colombia
Bogotá
Colombia
Bogotá
May 2021
1,00%
0,62%
3,18%
2,59%
3,30%
2,41%
May 2022
0,84%
0,82%
6,55%
6,22%
9,07%
8,33%
Source: DANE - Consumer Price Index (CPI).
3.3 Labor Market2 The unemployment rate in Colombia for May 2022 was 10.6%, compared to 15.2% for the same month in 2021, a decrease of 4.6 percentage points. For Bogotá and its metropolitan area, unemployment rate stood at 11.5% for the March-May 2022 quarter, 6.1 percentage points lower than the 17.6% registered for the same quarter in 2021. On the other hand, employed persons in the country increased by 2.3 million people between May 2021 and May 2022, from 19.9 million in 2021 to 22.2 million in 2022. This made the number of unemployed persons in the country decrease between May 2021 and 2022 by 940,000, for a total of 2.7 million. Furthermore, the gap in unemployment between men and women in May 2022 was 5.2 p.p. against women, compared to 6.1 p.p. for the same period in 2021. For May, the unemployment rate for women was 13.7% and 8.4% for men. 3.4 Business Dynamics During the January - May 2022 period, 42,573 companies were created in Bogotá and the 59 municipalities in its jurisdiction. New companies increased by 11% compared to the same period in 2021, 56% compared to the same period in 2020, and decreased by 6% compared to 2019. Of the total number of new companies registered, 71.5% correspond to natural persons and 28.5% to companies. On the other hand, commercial registration of natural persons increased from 25,933 to 30,445, which represents a positive variation of 17%. Among sectors, the service 2
Source: DANE, Great Integrated Household Survey (GEIH). Taken from: https://www.dane.gov.co/index.php/estadisticas-portema/mercado-laboral/empleo-y-desempleo
sector had the highest growth rate in commercial registrations, with 18%, followed by industry, with 17%; commercial registrations in commerce decreased by 2%. Bogotá and Cundinamarca continued with a stable process of recovery in the number of active companies, having 395,112 active companies for the January - May 2022 period. Likewise, 338,980 active companies were registered in Bogotá, accounting for 85.8% of all active companies in the region. The number of active companies increased by 7% compared to 2021. Based on the above, the business community had a consolidate total of 395,112 active companies for the January - May 2022 period. However, there were 399,068 companies in the jurisdiction for the same period of 2019, which means that 3,956 companies still need to be recovered to fully restore the business community existing in 2019. Table 2. Evolution of active companies between 2019 and 2022 for the January - May period by jurisdiction Municipality
Jan- may Jan- 3 Jul Jan-may Jan-may Variation 2019 Variation (2019) (2020) (2021) (2022) - 2022 2020 – 2022
Variation 2021 – 2022
Bogotá D.C.
347,656
284,839
317,874 338,980
-2%
19%
7%
59 municipalities
51,412
44,824
51,784
56,132
9%
25%
8%
Total BCC jurisdiction
399,068
329,663
369,658 395,112
-1%
20%
7%
Source: Commercial Registry, BCC, 2019 - 2020 – 2021 - 2022. The Commercial Registry was consulted on June 1, 2022 - Qlik Sense.
4.
Evolution of Foreign Trade
Exports3: Dynamic of Colombian exports: During January-April 2022, Colombia's external sales, including oil and its derivatives, totaled US$18.3 billion FOB, which represents an increase of US$6.4 billion compared to the same period in 2021, which is an increase of 54 .4%. Export levels surpassed the same period in 2019, standing at US$ 4.9 billion FOB above, an increase of 36.6%.
3 Source: DANE, Exports. April 2022. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/exportaciones
Graph 2. Colombian exports January - April 2019 - 2022
Billions of dollars FOB
Ene-abr 2019
Ene-abr 2020
13.4
10.6
Ene-abr 2021
11.9
Ene-abr 2022
18.3
Source: DANE - EXPO Dynamic of exports from Bogotá-Cundinamarca: Exports originating from Bogotá increased from US$ 1 billion FOB in January-April 2021 to US$ 1,4 billion FOB in January-April 2022; this represents a growth of 39.1%. On the other hand, exports from Bogotá grew by 75.5% compared to the same period in 2019, from US$ 794 million FOB in 2019 to US$ 1,4 billion in 2022, this represents an increase of US$ 600 million in exports from Bogota. Cundinamarca saw an increase of 45.4% in exports from January-April 2022 compared to the same period in 2021, from US$642 million FOB in 2021 to US$934 million FOB in 2022. Like Bogotá, Cundinamarca surpassed prepandemic period export levels, as January-April 2019 exports totaled US$713 million FOB. For January-April 2022, Bogotá was the second largest exporting department in the country with 11.8% of the country's total exports and is surpassed only by Antioquia, with 19.3% of total exports. Cundinamarca is the fifth largest exporting department in Colombia, with 7.9% of the country's total. This makes Bogotá - Cundinamarca the largest exporting region in the country, representing 19.8% of the country's total exports.
Graph 3. Bogotá – Cundinamarca region exports (without oil and its derivatives) April 2019 – 2022
794 713
Millions of dollars FOB
Ene-abr 2019
711 648
Ene-abr 2020
1.002
Ene-abr 2021
642 1.394
Ene-abr 2022
934
Bogotá
Cundinamarca
Source: DANE - EXPO Imports4: Dynamic of Colombian imports: For the January - April 2022 period, Colombian imports totaled US$ 25.3 billion dollars CIF, an increase of 46%, compared to the same period in 2021. Of total imports, 72.8% were manufactured goods, 15% agricultural products, food and beverages and 12% fuels and products for the extractive industries. Dynamic of imports in the Bogotá–Cundinamarca region: Imports into Bogotá and Cundinamarca increased 47.6% and 39.7%, respectively during the January-April 2022 period. External purchases from the region totaled to US$ 14.3 billion for the same period. 5.
Foreign Direct Investment
According to the Colombian Ministry of Commerce, Industry and Tourism, Foreign Direct Investment (FDI) stood at US$4.9 billion for the Jan-May 2022 period. This means an increase of 77.4% compared to the same period (JanuaryMay) in 2021.
4
Source: DANE, Exports. April 2022. Taken from: https://dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/importaciones
Investment in mining-energy sectors stood at US $3.3 billion as of May 2022, which represents an increase of 74.1% compared to the same period in 2021. FDI in non-mining-energy sectors totaled US $1.6 billion for the same period, which represents an increase of 84.5% compared to the same period in 2021. Additionally, foreign portfolio investment for the Jan-May 2022 period totaled US $1,4 billion, an increase of 43.4%. Finally, Colombia's direct investment abroad, for the January-May 2022 period, was negative by US $316 .8 million. Graph 4. Foreign Direct Investment. January – May (2014-2022)
Source: Banco de la República-Exchange Balance from the Ministry of Commerce, Industry and Tourism. May 2022.
6.
BCC News and Upcoming Events
• June 30 marked the 10th anniversary of the launch of the Bogotá Chamber of Commerce's Cluster Initiatives. In these 10 years, more than 100 projects have been carried out increasing the competitiveness of Bogotá and Cundinamarca with 16 cluster initiatives in sectors that bring together more than 260,000 companies from the region. For more information, please visit the following link. • The Bogotá Chamber of Commerce, together with the Fundación Ideas para la Paz (FIP) and Guías Colombia, launched the first Human Rights Due Diligence Guide for SMEs. This guide seeks to support companies and help them align their operations with the highest international standards in Responsible Business Conduct and current market demands. For more information, please visit the following link. • The 13th edition of the Bogotá Audiovisual Market (BAM) will take place from July 11 to 16. This is an initiative of the Bogotá Chamber of Commerce aimed at further strengthening the economic recovery and growth of the
Colombian audiovisual industry. The opening event will take place on July 13 at the Cinemateca de Bogotá. For more information, please visit the following link. 7.
Sources
• For more information, please https://www.ccb.org.co/observatorio
visit
the
• DANE. National accounts. Taken from: nacionales/cuentas-nacionales-trimestrales
Observatory
of
the
Bogota
Chamber
of
Commerce.
https://www.dane.gov.co/index.php/estadisticas-por-tema/cuentas-
• DANE. Labor market. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/mercado-laboral/empleo-ydesempleo •
BCC Commercial Registry, 2019 - 2020 – 2021 - 2022. Taken from: https://www.ccb.org.co/Inscripciones-yrenovaciones/Matricula-Mercantil/Boletines-del-Registro-Mercantil/Boletines-ano-2021
• DANE. Social Pulse Survey. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/encuesta-pulso-social • DANE, Exports. April 2022. internacional/exportaciones
Taken
from:
https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-
• DANE, Imports. April 2022 internacional/importaciones.
Taken
from:
https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-
• Ministry of Commerce, Industry and Tourism. Foreign Direct Investment Reports. Taken https://www.mincit.gov.co/estudios-economicos/estadisticas-e-informes/informes-de-inversion-extranjera
from:
• DANE. Business Pulse Survey. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/comerciointerno/encuesta-pulso-empresarial • Bogota Economic Development Observatory. Taken from: https://observatorio.desarrolloeconomico.gov.co/expectativas/indice-de-confianza-industrial-vuelve-terreno-positivo
