Colombia’s economy may have suffered a hiccup, but it continues to outperform its regional peers amid a slowing of the commodities boom.
The national statistics agency said on Tuesday that gross domestic product grew 4.3 per cent in the second quarter of the year, below analysts expectations.
Colombia’s proposed higher wealth tax has been seen by some as vindication of Thomas Pikketty’s best-seller, Capital in the Twenty-First Century. But others, including some within the Colombian government, say the move to raise taxes on the rich simply brings an existing tax up to date.
Still, certain government insiders say Piketty’s writings have been much seen on the desks of senior officials in recent months. In his book, Piketty argues that inequality is a central feature of capitalism that can only be reversed through state intervention. Colombia, in spite of some recent advances, is still one of the world’s most unequal societies.
Colombia’s Banco de la República, the central bank, raised the benchmark rate a quarter point to 4.25 per cent on Thursday. This is the fourth consecutive hike, as the bank has been withdrawing monetary stimulus, amid faster growth in the fastest growing of the major Latin American economies.
By Mat Youkee of UK Colombia Trade
Colombia’s oil and gas industry – the key driver of the country’s growth over the last decade – is stuttering. In 2012 it reached its goal of producing 1m barrels per day, up from 600,000 bpd in 2008. But in 2014 attacks by insurgents on a key pipeline hit production figures and delays in obtaining drilling permits have prevented the development of new projects.
Most worryingly for the long-term health of the industry, however, has been a lack of major new discoveries. A handful of junior firms have made significant finds but much of the recent growth in production has been the result of optimizing previously discovered deposits, either by bringing online marginal fields or by boosting recovery rates through the application of new technology. At current production levels, the country’s 2.4bn barrels of proven reserves will last less than seven years.
Juan Valdéz, the moustached embodiment for Colombia’s coffee industry (along with his loyal donkey), may be grinning from the sidelines. After sourcing coffee from the Andean country for 43 years, Seattle-based Starbucks opened its first store here on Wednesday.
The three-story store is the first of 50 the company plans to open here in the next five years. But to the joy of proud Colombians (even Señor Valdéz), this will be the only country in the world to serve exclusively locally-sourced Starbucks coffee.
Recently re-elected Colombian president Juan Manuel Santos starts his second term in less than a month. As he won the election partly thanks to backing from an array of political actors – from leftists, to conservatives, to liberals – many think he may have some expensive favours to repay.
But foreign investors will probably be relieved that on Monday afternoon he gave his finance minister, Mauricio Cárdenas, a vote of confidence and reappointed him in the post.
It all seems to be going so well for Colombia: its national football team has reached the quarter finals of the World Cup for the first time, the economy grew by a startling 6.4 per cent in the first quarter, while unemployment hit a new low last week at 8.8 per cent, and economists say confidence is riding high.
But officials appear to be worrying once again about one of the hazards of economic success: the appreciation of the peso.
Colombia’s footballers have made it into the knockout rounds of the World Cup for only the second time in their history. As “yellow fever” grips the nation, the defence ministry has seized the moment and is hoping to use success on the pitch as a lure to draw the country’s armed rebels out of their trenches and closer to a peace deal.
The monetary policy committee of Colombia’s central bank on Friday raised the benchmark interest rate a quarter percentage point to 4 per cent. This is the third hike in three months.
Colombia’s economy has been performing strongly and inflation has been accelerating, leading to a monetary tightening, say analysts.
Colombia’s GDP data for the first quarter of 2014 came earlier than expected on Thursday morning, as if to be sure to avoid any distraction during the national team’s World Cup match against Ivory Coast.
The numbers gave Colombians a reason to cheer ahead of the game: the national statistics agency said GDP grew 6.4 per cent, more than analysts expected.
By Samuel George of the Bertelsmann Foundation
When the presidents of Chile, Colombia, Mexico and Peru meet on June 19 and 20 for the ninth Pacific Alliance summit in Nayarit, Mexico, they’ll likely debate a proposal that could transform their quietly successful pact while boosting Latin American unity.
At the urging of Chile’s Michelle Bachelet, the gathering is expected to broach the potential integration of the Alliance, which was formed among the four countries in 2012, and Mercosur, an older grouping that includes the regional heavyweights of Brazil and Argentina. The issue would represent a crossroads for the Alliance, however, since Mercosur does not generally share the enthusiasm for international trade shown by its neighbours on the Pacific coast.
Another month, another hike: the monetary policy committee of Colombia’s central bank on Friday night voted unanimously to raise the benchmark interest rate a quarter percentage point for the second straight month, to 3.75 per cent. José Dario Uribe, the bank’s chief, told reporters that “the gradual adjustment of the expansive monetary policy reduces the need for abrupt changes in the future and ensures macroeconomic stability”.
President Juan Manuel Santos says that if he wins Colombia’s elections he will put an end to the long-standing conflict with the Marxist insurgents of the Farc. He talks to Andres Schipani just days before the vote.
Colombians head to the polls on Sunday with the leading candidates for president separated by a shrinking margin that has suddenly made the race too close to call. Instead of a shoo-in for the centrist incumbent, Juan Manuel Santos, the campaign has turned into a bitter “dirty war” over the handling of a peace process with Marxist insurgents of the Farc that could finally end one of the world’s longest-running armed conflicts.