Gloria Camargo
According to data from the National Administrative Department of Statistics (DANE), the Colombian Economy Monitoring Indicator (ISE) registered a growth of 0.65% in May 2023 compared to the same month of the previous year. This positive data was driven mainly by the dynamism of primary activities, such as agriculture, livestock, hunting, forestry and fishing, as well as mining and quarrying, which showed growth of 1.26% compared to with May 2022.
On the other hand, secondary activities, such as manufacturing and construction, experienced growth of 0.6%. Meanwhile, tertiary or service activities registered growth of 0.6%, but negative results were observed in sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage, as well as such as accommodation and food services. The negative performance of activities such as professional, scientific and technical, and administrative and support services was also highlighted.
Given these results, Bruce Mac Master, president of the National Association of Businessmen of Colombia (ANDI), pointed out that there is a slowdown in the productive dynamics of the country. In addition, he highlighted that the growth projections of the Gross Domestic Product (GDP) for 2023 by various think tanks range between 0.6% and 1.5% in the most optimistic case. Mac Master highlighted the importance of developing a sustained growth agenda over time to counteract this slowdown and its negative effects, especially in an economy affected by inflation, unemployment and the impacts of the tax reform.
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ANDI’s president advocated open dialogue and trust building as key elements to promote a sustainable growth agenda. He stressed that the business sector is the main generator of employment in the country and that both the preservation and the creation of new jobs depend on the right conditions to encourage investment.
For their part, economic analysts from Credicorp Capital indicated that DANE data show an acceleration of economic growth in May. They pointed out that the ISE increased by 0.9%, offsetting the reduction observed in April. In annual terms, the Colombian economy expanded by 0.6% in May 2023 compared to the same month of the previous year. Based on these results, they maintained their GDP growth estimate for 2023 at 1.6%.
Credicorp Capital highlighted that a significant adjustment in private consumption and investment is expected in the future due to restrictive financial conditions, high prices, higher taxes and greater political uncertainty. However, they noted that public spending will play an important role in economic growth this year, as public investment is expected to increase at the subnational level and primary spending by the central government is expected to increase. In addition, a positive contribution from net exports is expected due to the adjustment in domestic demand.
In summary, although the Colombian economy showed a slight recovery in May, significant challenges remain. The momentum in primary activities was offset by negative performance in some service sectors. To drive sustainable growth, constructive dialogue and trust-building between public and private actors is required, along with policies that encourage investment and provide economic stability.