Colombia imports fell for the first time in 21 months: recession on board?

A few days ago, Dane reported that Colombia imports were US$6.043 billion in November 2022, a 7.7% decrease compared to the same month in 2021 (US$6.545 billion).

Although the level completed nine consecutive months above US$6 billion, the annual contraction is the largest in almost two years.

According to experts consulted by Bloomberg Línea, among the reasons for the slowdown in Colombia’s foreign purchases in the penultimate month of 2022, the deepest in 21 months, is lower local consumption given the economic slowdown that worsened from the second half of last year, commented María Paula González, economic research analyst at Corficolombiana.

However, González added that the drop in imports “is positive in the sense that it gives signs that the Colombian economy is slowing down its growth, in a context in which the country has been growing above potential. In addition, a drop in imports translates into a smaller trade deficit.”

For his part, Gustavo Acero, senior economist at Banco de Bogotá’s economic team, commented that the contraction in imports “is due more to a statistical base effect, which begins to play against despite the fact that they remain at high levels in amount”.

Acero added that “the loss of traction of imports could impact investment, due to the component of intermediate goods and machinery, which have a highly imported percentage.”

According to the economic research experts from Banco de Bogotá, “the high base of comparison begins to work against imports, although their level continues to be high, which continues to generate pressure on the trade balance and, in the meantime, of the lagged rebound in exports, limit the correction of the deficit”.

Regarding the trade balance, the bank’s analysts said that “the deficit in November was US$1.115 billion, completing four consecutive months above the barrier of US$1 billion.

Although it is still high, it corrected compared to the previous year when it totaled more than US$1.8 billion and the accumulated 12 months fell from US$15.3 billion to levels close to US$14.5 billion.

The experts added that the balance of the external accounts at the end of the year, at least from the trade balance, suggests two points: “1) it is positive that the deterioration of the trade balance has paused, after reaching all-time highs in the first semester ; 2) the high levels that continue to occur, beyond the correction, are worrisome and negative, since the deterioration could also be beginning to show signs of stagnation”.

With information from Bloomberg