NEWSLETTER # 26 International Allies Bogotá, November, 2023 CONTENT 1. Guest Columnist 2. Good news from Colombia and Bogotá-Region 3. BCC News and Upcoming Events 4. Economic Developments 4.1. 4.2. 4.3. 4.4. 4.5.
Gross Domestic Product - GDP Economic Monitoring Indicator Inflation Business Dynamics Job market
5. Evolution of Foreign Trade 6. Foreign Direct Investment 7. Sources
1. GUEST COLUMNIST
Greeting to the Executive and the subscribers of this important magazine. It is indeed a pleasure and excitement to contribute to the magazine. Diplomatic relations between the Republic of South Africa and the Republic of Colombia were formally established on 12 April 1994, with Colombia opening its Embassy in Pretoria during 1995. The Ambassador of South Africa to Venezuela, concurrent to Colombia presented copies of her credentials to the Vice Minister of Foreign Affairs Mr Francisco Coy in March 2023 and subsequently presented her credentials to His Excellency President Gustavo Petro Urrego on the 8th November 2023. Ambassador’s main task is to manage interstate relations between the two countries and among the areas of focus is to promote trade and investment. South Africa and Colombia share a similar economic profile and demographics; both are upper middle-income countries with population demographics of similar proportion. Currently, the main strategic objective of South Africa is to build strong political relations with Colombia in the short, medium to long term, and to strengthen economic and trade ties starting with the primary areas of: • • • • • • •
Mining Agriculture Tourism Sports Arts and Culture Financial Services Manufacturing and Retail sector
Like Colombia, South Africa is a developing country with myriads of social needs to address and the cross country foreign direct investment becomes crucial. Equally, South Africa believes that supporting small and medium size enterprises is an important step, as they are central in job creation and growing the economy. Business statistics between the two countries suggest that there is a low level of inflow and outflow of trade, and investments remains low and leave much to be desired. However, there is room for improvement. The official visit by the Vice President of Colombia, HE Francia Elena Márquez Mina to South Africa in May 2023, accompanied by a huge delegation which included
representatives of different sectors including business solidified bilateral relations between the two sister countries. Memoranda of Understanding of various sorts were signed, including with different Chambers of Commerce in South Africa bears testimony of deepening relations. The Ambassador, though resident in Venezuela, undertook to visit and meet with several stakeholders in Colombia quarterly in the quest of strengthening the bilateral relations and deepening of the relations between South Africa and Colombia an expression of her commitment to improve relations that will lead to tangible deliverables. Although the levels of Foreign Direct Investment are still low between the two countries, the Aldor Group (Colombian Multinational Company) which has the second largest confectionery factory in South Africa, Nutresa, Westphalia, Aspen, Anglo Gold Ashanti and Old Mutual Insurance Company among others are examples of confidence that they have on both countries’ economies. The above listed economic sectors are of vital importance to South Africa and the business corporate of Colombia is invited to consider investigating opportunities and invest in them. South Africa is a member of the BRICS (Brazil, Russia, India, China and South Africa) Group of Countries which encompasses more than 25% of the World’s land area and 40% of the World’s population and is poised to expand. Currently, BRICS countries combined, its GDP in 2023 is estimated to be at about $27.6 trillion. With the strong collaboration with South Africa, Colombian companies could benefit greatly in trading with BRICS countries including taking advantage of the opportunities provided by BRICS Development Bank whose main trust is to provide finance for infrastructure development. Business organisations like Bogotá Chamber of Commerce (BCC) and ProColombia with their vast institutional memory and resources could collaborate effectively with other South African business institutions of similar nature by reaching out to each other. South Africa is also a member of the African Union (AU). The AU, in its newest layer that came to light since its establishment, is the so-called 6th Region, which was constructed to increase the participation of actors located outside the continent. The 2003 Protocol on Amendments to the Constitutive Act sought to “invite and encourage the full participation of the African Diaspora as an important part of our Continent, in the building of the African Union”. This has taken the form of participation as either observers or delegates at AU summits and stakeholder meetings. At the 2012 Global African Diaspora Summit, organisers released a declaration reiterating the relevance of the Sixth Region. The document placed an emphasis on the Diaspora, calling on its representatives to “organise themselves in regional networks and establish appropriate mechanisms that will enable their increasing participation in the affairs of the African Union as observers and eventually, in the future, as the Sixth Region of the Continent that would contribute substantially to the implementation of policies and programmes”. This then places Colombia at a better place to participate and benefit from the programmes of the African Union. This is important, based on the fact that South Africa is a member of ACFTA (African Continental Free Trade Area) whose aim is to provide broader and deeper economic integration across the continent as well as to attract investment, boost trade, provide better jobs, reduce poverty and increase shared prosperity in Africa.
The South African Embassy stands ready to assist in connecting these entities. South Africa is geographically located on the Southern tip of the African Continent and in a region whose population is young and are its future consumers. The Southern African Development Community (SADC) Region has a population estimated to be at around 300 million. It is, therefore, important for Colombian companies to see South Africa as a gateway to the African continent. It is within the above context of cooperation that South-South Cooperation becomes vital and can be beneficial for both countries. Colombia has already demonstrated its vision and foresight by organizing a Global Summit, which was hosted by the city of Valledupar. South Africa participated in the summit fully, as it supported the agenda of the APC-Colombia in promoting South-South relations. South-South Cooperation is about finding ways of finding and promoting viable solutions that will serve humanity. The Colombia businesses and the investing community are welcome to invest in South Africa and South Africa is open for business. With the spirit of connecting humanity, in other words, people to people through culture and tourism, South Africa welcomes Colombians wishing to visit the country with open arms. Advocate Lindiwe Michelle Maseko Ambassador of South Africa to Colombia 2. GOOD NEWS FROM COLOMBIA AND BOGOTÁ-REGION
GOOD NEWS FROM COLOMBIA • From November 20 to 28, the Colombia Investment Summit took place. The Colombia Investment Summit is the most important event in terms of attracting foreign direct investment to the country. In this edition, the event had the participation of more than 750 businessmen and investors from 43 countries who confirmed Colombia as an attractive destination for foreign investment that offers opportunities in various sectors and regions. For more information, please visit the following link. • Colombia will host the VI Ibero-American MSME Forum. The sixth edition of the Ibero-American MSME Forum will take place in Medellín on December 11 and 12 and will have the participation of representatives from the 22 countries of Ibero-America, in a historical moment represented by the prominent role that micro, small and medium-sized companies play in the economic growth of the region. This Forum was held for Colombia within the framework of the State visit to Spain of the President of the Republic of Colombia, Gustavo Petro Urrego, and will bring together senior officials responsible for MSME policies from Ibero-American countries, researchers and academics, representatives from multilateral organizations and representatives from business organizations in the region. For more information, please visit the following link. • Colombia, leader in South America in international traveler arrivals. In the most recent study “World Travel Trends 2023”, carried out by the prestigious consulting firm ForwardKeys, data showed the recovery of international tourism in Colombia, which highlights the country's position in second place on the list of destinations, with better numbers even compared to 2019. Overall, the country experienced
outstanding growth in foreign tourist arrivals in 2023, surpassing markets such as Brazil, Argentina, Chile and Peru. For more information, please visit the following link. GOOD NEWS FROM BOGOTÁ-REGIÓN • Bogotá is awarded by the World Travel Awards 2023, known as “the Oscars of Tourism” as a leading business travel destination in South America. The capital was recognized as a leading business travel destination in South America. Likewise, the leading conference and meeting center in South America was the Ágora-Bogotá Convention Center, a subsidiary of the Bogotá Chamber of Commerce. For more information, please visit the following link. • Bogotá is a highlighted in Time Use Week for its District Care System. Within the framework of this event, the Undersecretary of Corporate Management of the District Secretariat for Women, Laura Tami Leal, has shared the experience of Bogotá in the implementation of the District Care System, a policy with which the District Administration works to help women overcome time poverty caused by an overload in care work. For more information, please visit the following link. • UNESCO places Bogotá as the first city in the world to evaluate the impact of sport on sustainable development and the social return on investment. The District Institute of Recreation and Sports (IDRD), in alliance with UNESCO, as part of the Fit for Life program, developed research aimed at measuring the impact of its management of the environment, public health, security and development of the city. Among others, the success of the investment project “Building Active and Healthy Communities” implemented by the IDRD stands out, which has generated savings in health costs of 311 million dollars and has helped prevent 835,000 cases of coronary heart diseases in the population. For more information, please visit the following link. 3. BCC NEWS AND UPCOMING EVENTS
•
Next Tuesday, December 5 and Wednesday, December 6, the following event will be held: Current events and perspectives for 2024 for Colombian-Venezuelan integration. The Bogotá Chamber of Commerce through its executive president, the District Secretariat of Economic Development and the Colombian-Venezuelan Chamber, will meet to seek to establish a strategic collaboration between the participants to support companies from the Bogotá Region in their commercial interests in Venezuela. Updated information on regulations, strategies, business roundtables, specialized advice and relationship opportunities with Venezuelan businessmen will be reviewed and shared.
•
The Bogotá Chamber of Commerce, the United Nations Environment Programme (UNEP) and CEPEI, invite all to the UNEP Regional Foresight Workshop – Latin America and the Caribbean Region this December 4 and 5 at the BCC Chapinero Business Center. The goal of this effort is to develop an anticipatory, future-oriented culture, recognizing that addressing the global systemic challenges we collectively face requires integrating forward-looking knowledge and perspectives from
different disciplines, knowledge systems, and sectors of society. For more information, please visit the following link.
4. ECONOMIC DEVELOPMENTS
4.1. GROSS DOMESTIC PRODUCT - GDP In the third quarter of 2023, Colombia's GDP decreased by 0.27% compared to the same period of the previous year, this means a decline of 7.7 percentage points compared to the second quarter of 2022 in which the country grew by 7.4%. The growth rate slowed down compared to the first half of 2022, even reaching negative levels in the third quarter of 2023. The economic activities with the highest participation in gross value added in the third quarter of 2023 were wholesale and retail trade, public administration and defense, and manufacturing industries, with a share of 20.73%, 16.16% and 12.43% respectively. Graph 1. Annual growth rate, by quarter, of GDP between 2019 and 2023 - Colombia and Bogotá
18,2%
3,6%
19,0% 13,8% 12,2% 11,1% 13,5% 11,1%
3,9% 3,7% 3,8%
2,4% 3,1% 3,2% 3,0% 0,5%
8,8%
12,3%
8,2%
1,5% 1,6%
1,1%
15,5%
7,4%
3,9% 3,1% 0,16%
2,1% 3,0%
-3,5% -3,9% -7,8%
0,41%
-0,27%
-9,2% -15,9% I
II
III
2019
IV
I
-16,9% II III 2020p
IV
I
II
III
IV
2021pr Colombia
I
II
III
2022pr
IV
I
II
III
2023pr
Bogotá
Source: DANE – SDDE.
As for Bogotá, in the second quarter of 2023, Bogotá's GDP grew by 0.16%, a modest economic growth compared to the same quarter of the previous year, in which Bogotá experienced a growth of 15.47%. This difference between the two second quarters reflects a significant slowdown in Bogotá's economy.
4.2 ECONOMIC MONITORING INDICATOR According to the Economic Monitoring Indicator, in 2022 and 2023, monthly growth has oscillated between -2% and 2% as seen in Chart 2. In September 2023, the Economic Monitoring Indicator recorded a monthly growth of 0.1%, remaining on trend for recent months.
Graph 2. Monthly growth in the Economic Monitoring Indicator
1,9 1,3 1,5 1,3 0,3 0,8 0,0 -1,6 -0,5 -0,9 -1,3 -1,7
2,4
0,1
0,5 -0,9
0,8 -1,2
Junio Julio
1,5
-0,2
-0,6
-4,6
-1,5
0,8 0,1
2021p
2022pr
Septiembre
Agosto
Enero Febrero
Diciembre
Octubre Noviembre
Septiembre
Julio Agosto
Mayo Junio
Abril
Febrero Marzo
Enero
Octubre
Agosto Septiembre
Junio Julio
Mayo
-4,8
Marzo Abril
Enero
4,3 1,4
1,8
Noviembre Diciembre
1,6 0,1
Abril Mayo
3,3
Marzo
6,8
Febrero
8,0 6,0 4,0 2,0 0,0 -2,0 -4,0 -6,0 -8,0
2023pr
Source: DANE. ISE, 2023.
In September 2023, the activities that showed the greatest monthly growth in the Economic Monitoring Indicator were Wholesale and retail trade with 1.1%, Agriculture, livestock and hunting with 0.8% and Information and communications with 0.7%. Regarding annual growth, the supply of electricity, gas, steam and air conditioning showed the highest growth with 4.8%. Likewise, the activities with the greatest annual decline in the Economic Monitoring Indicator in the last year have been the manufacturing industry and construction, with an annual variation of -5.0% as of September 2023. 4.3 INFLATION Colombia and Bogotá experienced a decrease in the monthly price variation in October compared to the same month of the previous year. In October 2022, the monthly variation in Colombia was 0.72% and in Bogotá 0.68%, while, in October 2023, it was reduced to 0.25% and 0.22%, 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 % of Monthly variation Period
% of Year-to-date variation
% of Annual variation
Colombia
Bogotá
Colombia
Bogotá
Colombia
Bogotá
oct-22
0.72
0.68
10.86
10.14
12.22
11.6
oct-23
0.25
0.22
8.27
8.59
10.48
10.78
Source: DANE- Consumer Price Index (CPI)
The year-to-date variation in Bogotá has exceeded that of Colombia in the same period. As of October 2023, the year-to-date variation in Bogotá was 8.59%, while in Colombia it was 8.27%. This indicates that the capital has experienced inflationary behavior higher than the national average during that time. For its part, the annual price variation in Colombia was reduced from 12.22% in October 2022 to 10.48% in October 2023, while the annual price variation in October 2023 in the capital shows a reduction of 0.38 percentage points compared to the same month in 2022, from 11.16% to 10.78%. The price variation data by spending division in Colombia and Bogotá for October 2023 show that it was spending on Alcoholic Beverages and Tobacco that drove inflation in Bogotá, presenting a variation of 1.01%. Recreation and Culture spending rose 0.76% in Bogotá, while Miscellaneous Goods and Services rose 0.52% in Bogotá. The only spending division that presented a negative variation in the city was Transportation with -0.11%. In Colombia's spending divisions, it is observed that it was Recreation and Culture that had the highest variation, with 0.55%. As in the capital, Transportation had a negative variation of -0.02%. 4.4 BUSINESS DYNAMICS For the month of October 2023, the data shows an increase in the number of active companies in the jurisdiction of the Chamber of Commerce, with an overall growth of 0.54% in total active companies as of October 2023 compared to the same month of 2022. This represents an increase of 2,575 companies in one year. When analyzing the participation of companies by legal status in October 2023, it can be seen that the majority of registered companies belong to Natural Persons, with a total of 272,274 companies, which represents 56.7% of the total. On the other hand, companies as Legal Persons reach a total of 208,167, which represents 43.3% of the total active companies in the same jurisdiction. Regarding annual variation, we can highlight that the Legal Person category experienced a positive growth of 2.1% in the number of active companies between October 2022 and October 2023, while the variation for Natural Persons was -0.6%.
Table 2. Evolution of active companies by size, between 2021 and 2023 for the January-October period Number of Active Companies
oct-22
oct-23
% Variation Variation participation 2021 - 2022 October 2023 2023 2023
Size
oct-21
Micro
411,983 441,596 444,924 8.0%
0.75%
92,61%
Small
25,190
25,417
24,786
-1.6%
-2.48%
5,16%
Medium
7,383
7,402
7,311
-1.0%
-1.23%
1,52%
Large
3,465
3,451
3,420
-1.3%
-0.90%
0.71%
Total for Bogotá. 448,021 477,866 480,441 7.2% Jurisdiction: Cundinamarca
0.54%
100.00%
Source: Commercial Registry, 2021-2022-2023
In terms of annual variation in the number of active companies compared to October 2022, Microenterprises had a growth of 0.75%, while Small Businesses experienced a decrease of -2.48%. For their part, Medium Companies fell 1.23%, while Large Companies registered a decrease of 0.90%. 4.5 JOB MARKET Employment has shown an improvement compared to the previous year; at the national level, the unemployment rate in September 2023 was 10.7%, 1.5pp lower than September 2022. Likewise, the employment rate has risen 1.0pp in the last year, standing at 58.3% for September 2023. The global participation rate increased by 0.1pp, going from 64.1% in September 2022 to 64.2% in September 2023. The above is a good indicator of the improvement in the job market. Despite the fact that more people are participating in the job market, in September 2023 unemployment remained lower than in the same month of the previous year. Table 3. TGP, TO and TD, Colombia Rate
Sep-22
Sep-23
Difference (p.p)
Overall participation rate
64.1
64.2
0.1
Occupation rate
57.2
58.3
1.0
Employment rate
10.7
9.3
-1.5
Source: Large Integrated Household Survey – (GEIH) DANE. September 2023
In the case of Bogotá and the metropolitan area, the unemployment rate was 9.7% for the moving quarter Jul23-Sep23, 0.3pp higher than the 9.4% of the national total for the same period. For the same quarter, the capital shows an occupation rate of 63.6%, 5.2pp above the national occupation for the same quarter. The data shows that more people of working age are participating in the job market in the capital (70.4%) than in the country (64.5%). The number of employed persons grew by 717,300 persons from September 2022 to September 2023, likewise the number of unemployed persons decreased 12.6%, which means 340,300 fewer persons in a non-occupation condition (previously, called “unemployed”). The perspectives on the number of employed persons are multiple, since economic growth in 2023 is expected to be lower than in 2022. 5. EVOLUTION OF FOREIGN TRADE
EXPORTS In September 2022, Colombia experienced a growth in exports of 33.76% compared to the same month of the previous year (2021). Bogotá had a growth of 22.82%, while Cundinamarca registered an increase of 11.33 %. A year later, in September 2023, Colombia experienced a 5.95% decrease in its exports compared to September 2022, indicating a slowdown period. Bogotá, on the other hand, achieved a modest increase of 1.23%, in contrast to Cundinamarca, which saw a decrease of 9.75%. Graph 3. Annual variation in exports for Colombia, Bogotá and Cundinamarca 2021-2023 120,0 100,0 80,0 60,0 40,0 20,0 0,0 -20,0 -40,0 -60,0
Colombia
Bogotá
Cundinamarca
Source: DANE, Exports.
In September 2023, compared to the previous month, Colombia exported $4.1 billion FOB dollars. Bogotá, for its part, maintained positive growth, reaching $332.46 million FOB dollars for that month. Finally, Cundinamarca experienced an increase in its exports, reaching $201.48 million FOB dollars. We should highlight that the capital's exports in September 2023 were 65.01% higher than those of the rest of the department of Cundinamarca.
In September 2023, total exports from the Bogotá-Cundinamarca region reached a value of $533.93 million FOB dollars. The United States stood out as the main destination for exports, with a total of $177.09 million FOB dollars, which is equivalent to 33.17% of the general total. Ecuador ranked second on the list of export destinations with $60.21 million FOB dollars, representing 11.28% of the total, while China was in third place with $36.58 million FOB dollars, and with a share of 6.85%. Peru and Mexico also stood out as relevant destinations with $28.04 million (5.25%) and $25.38 million (4.75%) respectively. Japan contributed $19.08 million (3.57%), and Venezuela and Chile contributed $15.56 million (2.91%) and $14.95 million (2.80%), respectively, to the region's exports. Argentina and Panama also played a notable role in exports, with values of $14.75 million (2.76%) and $9.93 million (1.86%), respectively. Exports to other countries, grouped under "Other Countries", represented $132.36 million FOB dollars, making up 24.79% of the overall total, a significant contribution in terms of share in the month of September. Graph 4. Exports according to destination countries. Bogotá – Cundinamarca, September 2023 Ecuador; 11,3%
China; 6,9% Perú; 5,3%
México; 4,8%
Estados Unidos; 33,2%
Japón; 3,6% Venezuela; 2,9% Chile; 2,8% Argentina; 2,8% Panamá; 1,9% Demás países ; 24,8% Source: DANE, International Trade
IMPORTS In September 2023, Colombia's total imports reached $4,94 billion CIF dollars, experiencing a decrease of 26.2% compared to September 2022. Similarly, Bogotá showed a decrease in its imports of 29.2%. 1% compared to the same month of the previous year, reaching $2,35 billion CIF dollars in September 2023. Bogotá's share of national imports also decreased, from 49.7% in September 2022 to 47.7% in September 2023.
Cundinamarca, for its part, experienced a reduction in imports, down to $382.1 million CIF dollars in September 2023, which is a variation of -38.4% in relation to September 2022. Cundinamarca's participation in national imports also decreased, from 9.3% to 7.7% in the same period. The Bogotá-Cundinamarca region, which includes Bogotá and Cundinamarca, recorded imports worth $2.74 billion CIF dollars in September 2023, representing a decrease of 30.6% compared to the same month of the year previous year. The share of this region in national imports went from 58.9% in September 2022 to 55.4% in September 2023. Graph 5. Imports from Colombia, Bogotá and Cundinamarca (July 2022-2023)
Millones de dólares CIF
6.695,8 4.944,2 3.325,4 2.358,1 620,8 Colombia
Septiembre 2022BogotáSeptiembre 2023
382,1
Cundinamarca
Source: DANE, Imports.
The country's main trading partners were the United States and China. The United States led with $719.84 million CIF dollars, representing 26.27% of the total, closely followed by China, which contributed $627.12 million CIF dollars, representing 22.89% of the total. These two countries represent almost half of all imports in the region (49.16%). Mexico, with $183.27 million CIF dollars, ranked third, contributing 6.69% of the total. Germany and Brazil also played a relevant role, contributing $136.58 million (4.98%) and $108.58 million (3.96%) respectively. Argentina and Japan reached $69.57 and $64.98 million CIF dollars respectively, while the United Kingdom, Italy and India presented contributions of $64.22, $56.94 and $54.31 million CIF dollars. Finally, the "Other Countries" contributed $654.84 million CIF dollars, representing 23.90% of the region's total imports, underscoring the diversity of import origins beyond the main trading partners.
6. FOREIGN DIRECT INVESTMENT
During the second quarter of 2023, the country received a total of US $5.27 billion in Foreign Direct Investment, equivalent to 6.2% of quarterly GDP. These resources were higher by US$ 157 million compared to the same period in 2022 and by US$ 996 million compared to the immediately previous quarter. Graph 6. Quarterly FDI flows
Source: Banco de la República
Regarding FDI flows by country of origin, during the second quarter of 2023 resources came mainly from 5 countries: United States (US$ 1.73 b), Anguilla (US$1.4 b), Spain (US$ 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
• For more information refer to the Observatory of the Bogotá Chamber of Commerce. 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. Job Market. Recovered from: tema/mercado-laboral/empleo-y-desempleo •
https://www.dane.gov.co/index.php/estadisticas-por-
Commercial Registry, BCC, 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