Colombian economy has reportedly started to cool down since July

Even though Colombia is one of the countries that will grow the most in the region this year, above 6%, since the second semester, the economic activity has started to cool down in the context of historical inflation and rising interest rates.

On Monday, September 19, the Colombian National Administrative Department of Statistics (DANE) will release official data regarding the Economic Monitoring Indicator (ISE) performance in July.

Experts have anticipated these data and estimate that from the seventh month onwards, the economy will not be the same as it was at the beginning of the year.

WHAT DO ANALYSTS EXPECT?

Juan Pablo Espinosa, director of economic research at Bancolombia, stated that “based on the most recent results of the Bancolombia NowCast Index, the real annual growth of the economy in July would have been 6.8%.

In seasonally adjusted terms, this would be equivalent to almost total stability of the country’s total production level in July compared to that recorded in June”.

To a large extent, Espinosa adds, “this trend would result from a deceleration that would become palpable in private consumption.

“It results from the high inflation records that have been affecting the purchasing power, the stagnation of the labor market, and the increase in interest rates that has begun to affect the evolution of credit placement and the costs that households and companies must assume for their financial commitments already in force”.

The expert added that this context would be affecting, in particular, the demand for goods, such that the manufacturing industry would have taken a slight step back in its production levels compared to June, while they would also expect a lower dynamism of entertainment services, recreation, and retail trade.

David Cubides, economic research manager of Alianza Valores, commented that they expect that since July, “the economic activity will enter a more moderate path after the continuous increase of interest rates, a process that has been observed since September of last year and additionally the persistence of inflation must be increased, which is currently at the highest level in this century and, of course, that begins to hit consumers”.

In that sense, says Cubides, “economic activity should continue to moderate, and these two leading indicators, manufacturing and retail sales, should begin to show a cooling trend in the Colombian economy, which is also part of a global trend in which developed economies have been showing more and more data showing weakness in their most relevant macro indicators”.

With information from Bloomberg