X COLOMBIA NEWSLETTER International Allies Bogotá, May 2022
CONTENT 1. Guest Columnist 2. Good News from Colombia 3. Economic Behavior 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
At the session of the World Chambers Federation General Council (WCF) on May 17, I was appointed as the upcoming president of this non-governmental and nonpolitical forum of the ICC, in which more than 1,200 chambers of commerce from 100 countries around the world come together to exchange experiences and good practices. Starting next July 1 and for a three-year term, after being ratified by the ICC World Council on June 14, I will have the honor of becoming the first person from the Americas to hold the most important position at the World Chambers Federation. This designation highlights the confidence that the international community has in Colombia and its productive sector to lead a unified world chamber system that promotes support for the digitalization of SMEs and provides all the tools needed to prepare the next generation of entrepreneurs, as well as for the spawning of a new era of more inclusive, sustainable, and socially conscious companies. Additionally, it represents an opportunity for Colombia to position itself as a regional leader by guiding a new integration process in Latin American chambers that will position our region at the forefront of best practices for business development worldwide. As the leader of the WCF, I will work specifically to identify successful global programs to obtain tools that support SMEs in accessing financing and increase their competitiveness; ensure the creation of policies that promote and facilitate entrepreneurship; provide assistance in strengthening chambers of commerce, especially in developing countries and emerging economies through the transfer of successful models and best international practices, to strengthen them as strategic agents of territorial development; and promote relations with international organizations to vindicate the role of the private sector in our society and promote suitable environments for business. Before concluding, I would like to express my deepest gratitude to the Ibero-American Chamber of Commerce Association, the Argentine Chamber of Commerce and Services, and the Santiago Chamber of Commerce for placing their trust in me and the Bogotá Chamber of Commerce by nominating us for such an important task. Please count on me as an ally in the World Chambers Federation to work tirelessly to consolidate businessmen and businesswomen as the main generators of equality and progress in our society and make business work for everyone, every day and everywhere. Nicolás Uribe Rueda Executive President of the Bogotá Chamber of Commerce and President-Elect of the World Chambers Federation (WCF)
2.
Good News from Colombia
Good News from Colombia • Nicolás Uribe Rueda, President of the Bogotá Chamber of Commerce, has been elected President of the World Chambers Federation (WCF). It is the first time a person from the Americas occupies the most important position at the World Chambers Federation, an organization that brings together more than 1,200 chambers and 45 million companies from more than 100 countries. For more information, please visit the following link. • During the first quarter of 2022, the Colombian economy grew by 8.5%, putting it above market expectations which stood at around 7.4%. More importantly, a 9.5% growth was observed compared to the same period in 2020 and 10.4% compared to 2019. This shows an effective recovery, with growth comparable to pre-pandemic levels. For more information, please visit the following link. • May 15 marked the tenth anniversary of the Free Trade Agreement (FTA) between Colombia and the United States, our country´s main trading partner, receiving nearly 29% of our exports of non-mining energy goods. Among some of the achievements of the treaty, it stands out that, while in 2011, a year before it entered into force, the number of companies that sold to the US was 3,102, in 2021, there were 3,444, a growth of 11%. And of the total number of companies that pledged to that market in 2021, 2,345 were micro, small and mediumsized, 68% of the total. For more information, please visit the following link. • The first round of the presidential elections took place in Colombia on May 29. Candidate Gustavo Petro received the most votes, with 40% of the total, followed by Rodolfo Hernández, with 28%. The two will compete for the presidency in the second round, to be held on June 19. For more information, please visit the following link. • During a state visit to Turkey by the President of the Republic, Iván Duque Márquez, this country recognized Colombia as a strategic ally and announced investment projects in our country for more than USD 400 million, as well as interest from the leading Turkish industrial groups to double their investment in Colombia in areas such as energy and port infrastructure. For more information, please visit the following link. • Colombian chef Leonor Espinosa, whose restaurant, Leo, is located in Bogotá, was chosen as the best female chef in the world according to the prestigious list “The World's Best 50 Restaurants”. For more information, please visit the following link.
Good News from Bogotá • Bogotá climbed seven places in StartupBlink's Global Startup Ecosystem Index 2022. The most complete annual index of the global startup economy announced that Bogotá moved from position 77 to 70 worldwide and ranked fourth among cities in South America. For more information, please visit the following link. • Bogotá was selected as one of the five most recommended Latin American capitals to invest in, according to the most recent edition of “Best to Invest”, a publication from Site Selection magazine. For more information, please visit the following link. • Our country's capital climbed 22 positions in the Global Financial Centres Index, a biannual ranking considered one of the main references for public policy decision-makers and investors. For more information, please visit the following link. • The Chinese biopharmaceutical company Sinovac will begin constructing a vaccine production plant in Bogotá. Weining Meng, Vice President of Sinovac Biotech (Hong Kong) Ltd., explained that construction would be divided into three sub-projects. The first stage will be focused on filling and packaging and will start in 2023. For more information, please visit the following link. • According to Invest in Bogotá, new and extended Foreign Direct Investment (FDI) in the capital exceeded USD 1.55 billion through 115 projects in 2021. This is equivalent to a 78% growth when compared to 2020. The sectors that most attracted FDI during 2021 from the Bogotá Region were software development, IT and service outsourcing (26%), communications (16%), corporate services (8%), consumer products (7%), and leisure entertainment (7%). For more information, please visit the following link. • The fifth edition of Bogotá Fashion Week, organized by the Bogotá Chamber of Commerce, was held from May 19 to 21. This event brings together more than 100 brands and designers and multiple national and international players from the fashion sector to promote our entrepreneurs´ creative talent. The event drew in more than 19,000 people, more than 400 business meetings were held, and deals worth more than US $2.5 million were generated. For more information, please visit the following link.
3.
Economic Developments
3.1 Gross Domestic Product (GDP)1 The National Administrative Department of Statistics (DANE) published the quarterly results of the growth of the Gross Domestic Product for the first quarter of 2022. GDP grew by 8.5% in the first quarter of 2022 compared to the first quarter of 2021. But, more importantly, a growth of 9.5% was observed comparing it with the first quarter of 2020 and 10.4% compared to the same period in 2019. This shows an effective recovery, with growth comparable to pre-pandemic levels. Graph 1. Annual growth rate of the Gross Domestic Product, by quarter, between 2019 and 2022 for Bogotá and Colombia 18,3% 17,3%
12,5% 13,7%
3,5%
3,8%
2,3%
3,0%
3,7% 3,2%
3,9% 3,0%
1,1%
10,8%
8,5%
11,2%
0,9% -3,7%
0,8%
-8,8%
0,8%
-3,6%
-15,5% -7,6%
I
II
III
IV
2019
I
-16,6% II
III
IV
2020p
Colombia
I
II
III
2021pr
IV
IV 2022
Bogotá
Source: DANE. Directorate of Synthesis and National Accounts. Constant prices based on 2015. To date, no information for the first quarter is available for Bogotá.
1
Source: DANE, National Accounts. Posted on May 15, 2022
3.2 Inflation Price variation in the country reached 1.25% and 1.29% in Bogotá in April 2022. This has been the highest variation for the month of April since 2005. So far, the country has experienced a price variation of 5.66% year to date. In the case of Bogotá, the increase was 5.36%. To put these figures into context, the projections that Banco de la República had in April 2022, published in its monetary policy report, showed that it expected a closing inflation rate of 7.1% for 2022. This means that in 4 months, 79.7% of the inflation expected by the central bank for the whole year has already occurred. Table 1. Monthly and year-to-date inflation in Colombia and Bogotá during April 2022. Monthly variation
Variation year to date
Annual variation
Period Colombia
Bogotá
Colombia
Bogotá
Colombia
Bogotá
April 2021
0,59%
0,56%
2,16%
1,95%
1,95%
1,38%
April 2022
1,25%
1,29%
5,66%
5,36%
9,23%
8,11%
Source: DANE - Consumer Price Index (CPI).
Regarding the sectors that presented the most significant price variation, both in Bogotá and in Colombia, four large groups stood out, which explain the increase in prices: (1) food and non-alcoholic beverages, (2) accommodation, water, electricity, and gas (3) restaurants and hotels and (4) clothing and footwear, which together had a contribution to the variation in inflation of 0.98 percentage points, out of 1.25 for Colombia. It should be noted that the variation in the prices of food and non-alcoholic beverages continues to rise month after month, and it is worth noting that the trend grew throughout the year by above 2.5%. Despite this, in the first four months of the year, it has increased by 13.5%.
Graph 2. Monthly CPI variation, according to expenditure division, Colombia and Bogotá April 2022
Variación mensual IPC
Bogotá D.C. Prendas De Vestir Y Calzado Alimentos Y Bebidas No Alcohólicas Muebles, Artículos Para El Hogar Y Para La Conservación… Recreación Y Cultura Restaurantes Y Hoteles Bienes Y Servicios Diversos Salud Alojamiento, Agua, Electricidad, Gas Y Otros Combustibles Bebidas Alcohólicas Y Tabaco Transporte Información Y Comunicación Educación
Colombia
1,38% 1,49% 1,23% 1,18% 0,91% 1,09% 0,82% 0,96% 0,73% 0,87% 1,16% 0,82% 0,44% 0,68% 0,90% 0,66% 0,20% 0,13% 0,00% 0,01%
3,10% 2,99% 2,81% 2,75%
Source: DANE - Consumer Price Index (CPI).
3.3 Labor Market2 The unemployment rate in Colombia in April 2022 was 11.2%, while it stood at 15.5% for the same month in 2021, which means a decrease of 4.3 percentage points. The information available for the analysis of the labor market in Bogotá allows us to observe that, in the moving quarter from January to March 2022, the unemployment rate stood at 14.6%, which represents a decrease of 5.3 percentage points compared to the same period of 2021 when the unemployment rate stood at 19.9%. On the other hand, employed population in the country increased by 2.2 million people between April 2021 and April 2022, from 19.7 million in 2021 to 21.9 million in 2022. This means the number of unemployed in the country decreased between April 2021 and 2022 by 860,000, from 3.62 million in April 2021 to 2.76 million in April 2022. In addition, the gap in the unemployment rate between men and women in April 2022 was 5.3 percentage points. Men registered an unemployment rate of 8.9% for this month while women registered an unemployment rate of 14.2%. By sex, in April 2022, Colombia had an increase of 1.3 million employed women and 875,000 employed men compared to the same month in 2021. For its part, by April 2022, the reduction in the unemployed population was higher among men (-575,000) than among women (-285,000). It is also important to note that the unemployment rate for 15–28-year-olds in the February-April 2022 quarter was 20%
2
Source: DANE, Great Integrated Household Survey. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/mercadolaboral/empleo-y-desempleo
3.4 Business Dynamics New companies During the January - April 2022 period, 34,000 companies were created in Bogotá and the 59 municipalities in its jurisdiction. New companies increased by 5% compared to the same period in 2021, 41% compared to the same period in 2020, and decreased by 6% compared to 2019. Of the total number of newly registered companies, 71.2% correspond to physical persons and 28.8% to juridical persons. On the other hand, business registration of physical persons increased from 21,959 to 24,165, which represents a positive variation of 10%. The highest growth sector was the services sector, with 13%, followed by industry, which increased by 13%, and, inversely, commerce had an 8% decrease in registrations. Active companies Bogotá and Cundinamarca continued a stable recovery process in the number of active companies, with 368,021 active companies for the January - April 2022 period. Likewise, 315,659 active companies were registered in Bogotá, accounting for 85.9% of the region’s total active companies. The number of active companies increased 5% compared to 2021. However, some challenges remain to reach the levels observed in the same period of 2019 when there were 372,243 companies in the jurisdiction, which means that 4,222 companies still need to be created to restore the existing business fabric of the pre-pandemic period. Table 2. Evolution of active companies between 2019 and 2022 for the January - April period by jurisdiction zone Municipality
Jan-Apr (2019)
Bogotá D.C.
324.322 282.333 300.722 315.659
-3%
12%
5%
47.921
52.362
9%
18%
6%
372.243 326.569 349.921 368.021
-1%
13%
5%
59 municipalities Total BCC jurisdiction
Jan- Jul (2020)
44.236
Jan-Apr Jan-Apr Variation Variation Variation (2021) (2022) 2019 - 2022 2020 – 2022 2021 – 2022
49.199
Source: Commercial Registry, BCC, 2019 - 2020 – 2021 - 2022. The business information of the Commercial Registry was consulted on May 1, 2022 - Qlik Sense.
4.
Evolution of Foreign Trade
Exports3: Dynamic of Colombian exports: During January-March 2022, Colombia's foreign sales, including oil and its derivatives, totaled US$12.97 billion FOB, which represents an increase of US$4.04 billion compared to the same period in 2021, which means a rise of 45.2% in the country's exports. The level of exports surpassed the same period in 2019, standing at US$ 3.37 billion FOB above, an increase of 35.2%.
3 Source: DANE, Exports. March 2022. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/exportaciones
Millones de dólares FOB
Graph 3. Colombian exports January - March 2020 - 2022 Ene-mar 2019
9.594
Ene-mar 2020
8.802
Ene-mar 2021
8.934
Ene-mar 2022
12.973 Total Exportaciones Colombia Source: DANE - EXPO
Dynamic of exports from Bogotá-Cundinamarca: Exports originating from Bogotá increased from US$737 million FOB in January-March 2021 to US$1.03 billion FOB in January 2022; this represents a growth of 40.1%. On the other hand, exports from Bogotá grew by 51.1% compared to the same period in 2019, from US$ 538 million FOB in 2020 to US$ 1.03 billion in 2022, which represents an increase of US$ 454 million in exports from Bogotá (Graph 5). In the case of Cundinamarca, an increase of 33.3% was observed in exports from January-March 2022 compared to the same period in 2021, from US$506 million FOB in 2021 to US$675 million FOB in 2022. Like Bogotá, Cundinamarca also regained the export levels it had during the pre-pandemic period when in January-March 2019, exports were registered for US$549 million FOB. For January-March 2022, Bogotá is the second-largest exporting department in the country with 12.5% of the country's total exports and is surpassed only by Antioquia, which represents 20.5% of total exports. On the other hand, Cundinamarca is the fourth largest exporting department in Colombia, participating with 8.2% of the country's total exports. This makes Bogotá - Cundinamarca the largest exporting region in the country, representing 20.7% of the country's total exports.
Millones de dólares FOB
Graph 4. Bogotá – Cundinamarca region exports (without oil and its derivatives) February 2020 – 2022 Ene-mar 2019
578 549
Ene-mar 2020
538 533
Ene-mar 2021
506
Ene-mar 2022
737 675
Bogotá
1.032
Cundinamarca
Fuente: DANE - EXPO
Imports4: Dynamic of Colombian imports: During the January - March 2022 period, Colombian imports totaled 18.94 billion dollars CIF, an increase of 49.6%, compared to the same period in 2021. Of total imports, 75.4 % were manufactured goods, 13.9% were agricultural products, food, and beverages, and 10.5% were fuels and products from extractive industries. Dynamic of imports to the Bogotá – Cundinamarca region: Imports to Bogotá and Cundinamarca increased by 49.1% and 49.2%, respectively. External purchases in the region totaled US$ 10.59 billion for the January - March 2022 period. The Bogotá-Cundinamarca region, as is traditional, is first in total imports, with 55.9% of the total. Bogotá registered imports for US$ 8.95 billion and Cundinamarca for US$ 1.64 billion. 5.
Foreign Direct Investment
According to Colombia´s Ministry of Commerce, Industry, and Tourism, Foreign Direct Investment (FDI) was US$3.99 billion as of April 2022. This represents an increase of 78.6% compared to the same period (January-April) of the previous year. Investment in mining-energy sectors stood at US $2.60 billion as of April 2022, which represents an increase of 70.4% compared to the same period in 2021. FDI in non-mining-energy sectors totaled US $1.39 billion for the same period, representing an increase of 96.3% compared to the same period in 2021. Additionally, foreign portfolio investment as of April 2022 totaled US $926 million. Finally, Colombia's direct investment abroad for the January-April 2022 period was negative by US $238.2 million.
4
Source: DANE, International import trade. March 2022. Taken from: https://dane.gov.co/index.php/estadisticas-por-tema/comercio-internacional/importaciones
Graph 5. Foreign Direct Investment. January – April (2014-2022)
Source: Banco de la República- Exchange balance from the Ministry of Commerce, Industry, and Tourism. April 2022.
6.
BCC News and Upcoming Events
• On May 19, the Bogotá Chamber of Commerce and El Corte Inglés launched the second edition of the “Bogotá Marcando Estilo” program in the city of Madrid. With this initiative, we seek to promote the gastronomy of the Bogotá-Region and its fashion and tourism. Starting May 20 and for two months, nine fashion companies from the Bogotá-Region will have the opportunity to exhibit and sell their products in El Cortes Inglés stores in five (5) cities: Madrid, Bilbao, Lisbon, Valencia and Murcia; in addition to the chain's online channel. In terms of gastronomy, the second edition of Bogotá Marcando Estilo will allow chef Jaime Torregrosa of Restaurante Humo Negro to offer his menu from May 18 to 22 at Las Nubes de la Castellana restaurant. Additionally, the chef will be able, together with the R&D team of the restaurant group, to showcase a menu in the 90 cafeterias of El Corte Inglés. In terms of tourism, with the support of the El Corte Inglés Travel Agency, we have promoted Bogotá as a tourist destination, along with other cities in the country, through promotions on its website, catalogs, and advertorials, among others. For more information, please visit the following link. • The Bogotá Chamber of Commerce launched the Digital Transformation Program for Bogotá and the region’s health sector. This is one of the eleven flagship programs with a sectoral approach that the Bogotá Chamber of Commerce will launch in 2022 to support the consolidation of the economic reactivation in Bogotá and the Region. The program is aimed at medium and low-complexity Health Service Provider Institutions (IPS), and technology platforms focused on health. For more information, please visit the following link.
• The Bogotá Chamber of Commerce and the National Tax and Customs Authority (DIAN) eliminated the need for the pre-RUT registration (Unique Tax Registry number) to simplify procedures for creating companies, branches, and non-profits entities. In this way, a step in the business registration process was eliminated, and the issuance of the Business Certificate in Bogotá was streamlined. For more information, please visit the following link. 7.
Sources
• For more information, refer to the Bogota Chamber of Commerce Observatory. https://www.ccb.org.co/observatorio • DANE. National Accounts. Taken from: nacionales/cuentas-nacionales-trimestrales
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 •
Commercial Registry, BCC, 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. March 2022. Taken from: https://www.dane.gov.co/index.php/estadisticas-por-tema/comerciointernacional/exportaciones • DANE, International imports March 2022. Taken tema/comercio-internacional/importaciones.
from:
https://www.dane.gov.co/index.php/estadisticas-por-
• 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
