International Allies
Bogotá, February 2024 CONTENT
1. Guest Columnist
2. Good news from Colombia and Bogotá-Region
3. BCC News and Upcoming Events
4. Economic Developments
4.1. Gross Domestic Product - GDP
4.2. Economic Monitoring Indicator
4.3. Inflation
4.4. Labor Market
5. Evolution of Foreign Trade
6. Foreign Direct Investment
7. Sources
Towards a renewed investment agenda in Latin America and the Caribbean (LAC) A complex socioeconomic environment
The region needs to increase its potential growth and improve its social conditions in a complex international environment. Potential GDP per capita growth is just 0.7%, about 1 percentage point below developed economies. Socioeconomic conditions remain difficult in LAC with poverty levels at 29%. One of the main obstacles to responding to this situation is labor informality. On average, 42.8% of the region's population lived in a household that depends only on informal employment.
Towards more and better investments to promote sustainable development in LAC
With only 20% of GDP, LAC has one of the lowest levels of total investment of all regions in the world, which is partly due to low national savings rates. Since 2000, gross domestic savings have averaged 20% of GDP, compared to 35% of GDP in East Asia and the Pacific economies.
Foreign direct investment (FDI) represents an opportunity to boost productivity and innovation and to create quality employment. Although domestic investment remains low in LAC, the region has attracted relatively high levels of FDI. In 2022, it was the region of the world that registered, in relative terms, the largest FDI inflows (equivalent to 4% of LAC GDP). By way of illustration, the Marshall Plan amounted to about 2% of the total income of the recipient countries between 1948 and 1951. For its part, FDI in LAC exceeded 3% of GDP during the periods 2017-19 and 2020 -22.
Credible institutions are key to driving this agenda
It is essential to favor and promote greater dialogue with the private sector and civil society around the investment agenda, to improve the impact of these investments on development, while also helping to increase their legitimacy. It is necessary to boost confidence in private investment, since more than half of the region's citizens had little trust in national and international companies in 2020. Governments must establish mechanisms that promote impact assessments and national and international plans. Subnational development organizations can provide the comprehensive policy frameworks necessary to implement coherent investment and productive transformation strategies.
Sebastián Nieto Parra, Head of Latin America and the Caribbean at the OECD Development Center2. GOOD NEWS FROM COLOMBIA AND BOGOTÁ-REGION
GOOD NEWS FROM COLOMBIA
Cali, the capital of the Colombian Pacific, will host the COP 16 on Biodiversity. This event locates Colombia in the big leagues and places Latin America out in front proposing on the future of our planet. This being the greatest opportunity to show the world the country's biodiversity power, environmental justice and culture. For more information, please visit the following link
Emirates Airline lands in Colombia. The Arab airline, with the approval from Aerocivil, will begin to provide services as of next June for the Bogotá – Dubai – Bogotá route, with a stopover in Miami, daily. The study that the airline presented to Aerocivil indicates that "Colombia represents a significant and growing demand" for air travel to and from the United Arab Emirates. For more information, please visit the following link.
The collection of the Gold Museum travels to Europe for the first time. After being exhibited in the United States and Canada, it will open to the Swiss public at the Rietberg Museum from March 22 to July 21. The exhibition “More than Gold: Splendor and Thought of Indigenous Colombia" is made up of more than 400 indigenous pieces from the collection of the Colombian Gold Museum. For more information, please visit the following link
According to DANE's 2023 exports report, Colombia had an increase of 12.6% in exports of its main non-mining-energy products, such as automobiles, construction parts and flowers. For more information, please visit the following link
GOOD NEWS FROM BOGOTÁ-REGIÓN
Bogotá consolidates as an intelligent, sustainable, and accessible tourist destination. After receiving accreditation as a Smart Tourist Destination in 2023, the city continues in its process to become a smart tourism powerhouse, standing out along the five fundamental pillars: governance, innovation, technology, sustainability and accessibility. For more information, please visit the following link
The second financing event from the Secretary of Economic Development and Bancoldex was successfully held on February 21st. At this event, Bogotá´s productive units had access to information and financing for their businesses along two pillars: production and technology. For more information, please visit the following link.
Within the framework of the International Tourism Fair (FITUR), the Colombian capital received an international award for its accessible tourism strategy. This award highlights and states that the destination offers tourist facilities and attractions that are easily accessible
for the enjoyment of tourists, visitors, and residents with physical disabilities. For more information, please visit the following link
3. BCC NEWS AND UPCOMING EVENTS
El Corte Ingles and the Bogotá Chamber of Commerce open and invite applications to register for the Bogotá Marcando Estilo program. This initiative led in alliance with the Spanish stores El Corte Inglés aims to promote and develop new opportunities for MSMEs in the food, gastronomy, and tourism sectors in Europe, through an international strategy to promote new business for companies, increase their sales and diversify their marketing channels through global markets. For more information, please visit the following link
The Bogotá Chamber of Commerce welcomed to the 43rd Tourism Showcase of Anato, the most important tourism fair in the country that took take place from February 28 to March 1, in Corferias. On this occasion, we will have the special attendance of more than 70 entrepreneurs from peace tourism territories. For more information, please visit the following link
Launch of the program: Intercluster Business Connections of the BBC. This initiative seeks to help boost business between companies from different economic sectors in the Bogotá – Region: access new market segments; expand their network of suppliers, clients, and contacts; and do more businesses. For more information, please visit the following link
4. ECONOMIC DEVELOPMENTS
4.1. GROSS DOMESTIC PRODUCT - GDP
Colombia's GDP in 2023 registered a growth of 0.6% compared to 2022. Although there was some growth, the figure is lower than that expected by analysts who estimated that it would be greater than 1%.
In its January 2024 monetary policy report, the technical team of the Banco de la República projects economic growth of 0.8% for 2024.
The low GDP growth for 2023 is largely explained by the decrease in the manufacturing industries (-3.5%), construction (-4.2%) and commerce (-2.8%) sectors.
Public administration and defense; mandatory social security plans; Education; Human health care and social services activities
Artistic, entertainment and recreational activities and other service activities; Activities of individual households as employers; undifferentiated activities of individual households as producers of goods and services for their own use
1,0% 3,9%
Source:DANE.
In the fourth quarter of 2023, Colombia's GDP grew 0.26%, this is a decrease of 1.93 percentage points compared to the fourth quarter of 2022 in which the country grew 2.2%, but it did change the dynamic of the third quarter into a positive trend.
4. ECONOMIC MONITORING INDICATOR (EMI)
According to the Economic Monitoring Indicator (EMI) for the month of December 2023 (provisional), the EMI in its series adjusted for seasonal and calendar effects was 119.47, which represented a decrease of 0.20 %, compared to the month of November 2023.
Source: DANE. EMI, 2023.
In December 2023, the activities that showed the greatest monthly growth according to the EMI were Wholesale and retail trade with 1.9%, Financial and insurance activities with 5.3% and Electricity and gas supply with 0,7%. Regarding annual growth, financial and insurance activities showed the greatest growth according to the EMI with 8.58%. Likewise, the activities with the greatest annual decline
according to the EMI in the last year were the manufacturing industries and construction, with an annual variation of -3.7% for December 2023.
4.3 INFLATION
Colombia and Bogotá experienced a decrease in the monthly price variation in January 2024 compared to the same month of the previous year. In January 2023, the monthly variation in Colombia was 1.78% and in Bogotá 1.85%, while, in January 2024, it was down to 0.92% and 0.68%, respectively. This decrease indicates lower inflationary pressure in the Colombian economy.
Period
Source: DANE - Consumer Price Index (CPI).
As of January 2024, the year-to-date variation in Bogotá was 8.17%, while in Colombia it was 8.35%. This indicates that the capital has experienced lower inflationary behavior than the national average during this period.
For its part, the annual price variation in Colombia came down from 13.25% in January 2023 to 8.35% in January 2024 (4.9 points), while in the capital it shows a decrease of 4.54 percentage points compared to the same month in 2023, from 12.71% to 8.17%.
The price variation data by the spending division in Bogotá for January 2024 shows that the alcoholic beverages and tobacco spending division rose 1.36%, as well as the restaurants and hotels division with 1.31%. Regarding the divisions that fell, the spending division that presented the greatest negative variation in the city was recreation and culture with -0.42%, followed by information and communications with -0.18%.
In the spending divisions for Colombia, in January 2024 it was the Transportation division that presented the greatest variation, this being 1.99%, followed by Restaurants and hotels, Alcoholic beverages and tobacco, and Health with variations of 1.72%, 1.11% and 1.10%, respectively. Regarding decreases, Recreation and culture, and information and communications presented decreases of -0.21% and -0.12%, respectively.
Regarding the intervention rate, the Banco de la República continues with a strong policy and high rates, for the month of January 2024, it was 12.75%. Additionally, the monetary authority in its January monetary policy report projected the total and basic inflation of 5.9% and 5.4% for 2024, respectively.
Table 2. Monthly and annual inflation in Colombia and Bogotá during January 2023-2024.4.4 LABOR MARKET
Employment has improved compared to the previous year, at the national level the unemployment rate in December 2023 was 10.0%, 0.3 p.p. lower than December 2022. Likewise, the occupancy rate has increased 0.1 p.p. in the last year, standing at 57.4% for December 2023. The global participation rate did not change and stood at 63.8% in December 2023.
In the case of Bogotá and its metropolitan area, the unemployment rate was 9.4% for the moving quarter October-December 2023, a figure identical to the 9.4% of the national total for the same period.
For the same moving quarter, the capital shows an occupancy rate of 64.2%, 6.2 p.p. above the national occupancy rate for the same quarter, which stood at 58%. The data shows that more people of working age are participating in the labor market in the capital (70.8%) than in the country (77.6%).
The number of employed persons grew by 396,000 from December 2022 to December 2023, likewise the number of unemployed persons decreased 1.1%, which means 28,000 fewer people in a nonoccupied condition (previously, called “unemployed ").
5. EVOLUTION OF FOREIGN TRADE EXPORTS
In December 2023, Colombia experienced a -4.2% decrease in exports compared to December 2022, indicating a slowdown period. Bogotá, on the other hand, achieved an increase of 16.0%, in contrast to Cundinamarca, which saw a decrease of 18.3%.
Source: DANE,
In December 2023, compared to the previous month, Colombia exported $4.45 billion FOB dollars. Bogotá, for its part, maintained growth, reaching $387.8 million FOB dollars for that month. Finally, Cundinamarca experienced a drop in its exports, to $183.4 million.
In December 2023, total exports from the Bogotá-Cundinamarca region reached a value of $571.2 million FOB dollars. The United States stood out as the main destination for exports, with a total of $190 million FOB dollars, which is equivalent to 33.3% of the general total. Ecuador ranked second on the list of export destinations with $54 million FOB dollars, representing 9.5% of the total, while Costa Rica came in third place with 31 million FOB dollars, and with a share of 5.5%. Peru and Mexico also stood out as relevant destinations with $25.4 million (4.5%) and $23.8 million (4.2%) respectively. China contributed 27 million (4.8%), and Venezuela, Brazil and Guatemala contributed $20 million (3.5%), $15.8 million (2.8%) and $11.7 million (2.0%), respectively, to the region's exports.
Japan also played a notable role in exports, with values of $19 million (3.4%). Exports to other countries, grouped under "Other Countries", represented $152 million FOB dollars, making up 26.5% of the overall total, a significant contribution in terms of share for the month of December.
Other countries; 26.5%
Guatemala; 2.0%
Brazil; 2.8%
Japan; 3.4%
Venezuela; 3.5%
Mexico; 4.2%
Perú; 4.5%
China; 4.8%
IMPORTS
Ecuador; 9.5%
Costa Rica; 5.5%
In December 2023, Colombia's total imports were worth $5.25 billion CIF dollars, experiencing a decrease of 10.2% compared to December 2022. Similarly, Bogotá showed a decrease in its imports of 7.3% compared to the same month of the previous year, at $2.65 billion CIF dollars for December 2023. However, Bogotá's participation in national imports increased, from 49.0% in December from 2022 to 50.6% in December 2023.
Cundinamarca, for its part, also experienced a decrease in its imports, with $427.3 million CIF dollars in December 2023, which is a variation of -15.7% in relation to December 2022. Cundinamarca's participation in national imports decreased, from 8.7% to 8.1% in the same period.
The Bogotá-Cundinamarca region recorded imports worth $3.08 billion CIF dollars in December 2023, representing a decrease of 8.5% compared to the same month of the last year. The share of this region in national imports went from 57.6% in December 2022 to 58.7% in December 2023.
Graph 4. Exports according to destination countries. Bogotá – Cundinamarca, December 2023 USA; 33.3% Source: DANE, International Trade.The country's main trading partners were the United States and China. The United States led with $782.5 million CIF dollars, representing 25.4% of the total, followed closely by China, which contributed $667.7 million CIF dollars, representing 21.6% of the total. These two countries represent almost half of all imports into the region (47.0%).
Mexico, with $178.1 million CIF dollars, ranked third in importance, contributing 5.8% of the total. Germany and the Netherlands also played a relevant role, contributing $153.6 million (5.0%) and $143.7 million (4.7%) respectively. France and Nigeria reached $113.6 and $91.1 million CIF dollars respectively, while Italy and the United Kingdom presented contributions of $62.5 and $62 million CIF dollars.
Finally, "Other Countries" contributed $830 million CIF dollars, representing 26.9% of the region's total imports, underscoring the diversity of import origins beyond the main partners mentioned above.
6. FOREIGN DIRECT INVESTMENT
During the third quarter of 2023, the country received US$3.7 billion through FDI, equivalent to 3.4% of the quarter´s GDP. These resources were US$255 m higher compared to the same period in 2022, and US$1.86 billion lower compared to the immediately previous quarter.
Source: Banco de la República
Regarding FDI flows by country of origin, during the third quarter of 2023, resources came mainly from the United States (US$ 1.13 b), Spain (US$ 555 m), England (US$ 335 m), Panama (US$ 201 m), Mexico (US$ 156 m), Canada (US$ 156 m), Anguilla (US$ 152 m), and France (US$ 103 m). The annual increase in FDI (US$ 255 m) is explained by the higher investments received from the United States, Mexico, Cayman Islands, England, and Canada, partially offset by lower investments from Switzerland, Panama, the Netherlands and Spain.
Graph 6. Quarterly FDI flows
7. SOURCES
For more information contact 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. Labor Market. Recovered from: https://www.dane.gov.co/index.php/estadisticas-por-tema/mercado-laboral/empleo-y-desempleo
Commercial Registry, BCC, 2019 - 2020 – 2021 – 2022 – 2023 - 2024. Recovered from: https://www.ccb.org.co/Inscripciones-y-renovaciones/Matricula-Mercantil/Boletines-del-RegistroMercantil
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
Banco de la República. https://www.banrep.gov.co/sites/default/files/nota_de_prensa_inversion_directa.pdf