Colombia: Growth strengthens during second half of 2013
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Transcript of Colombia: Growth strengthens during second half of 2013
Growth strengthens during second half of 2013 Colombia Outlook
BBVA Research Colombia
August 2013
Página 2
Main messages
• Growth decelerated in emerging economies, but a gradual recovery of developed economies consolidates
•
not compromise our year end growth forecast of 4.1% of GDP. For 2014 we expect a more robust growth rate of 4.7%
• Inflation will be slightly below the mid point of the target range in
2013 (2.7%) and slightly above in 2014 (3.2%). We do not anticipate a change in the monetary stance until the second quarter of 2014
• Uncertainty regarding the timing of the withdrawl of QE3 in the US will continue to generate volatilty in local markets
Lower growth in emerging markets and uncertainty regarding withdrawl of quantitative easing in the U.S.
Page 4
Net flows to EM bond and equity funds (Mln dollars, four-week average) Source: EPFR and BBVA Research
withdrawl was greater than expected
Normalization of global financial conditions, with higher interest rates and lower demand for
emerging markets
Lower liquidity will have greater impact on emerging markets
-40000
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-20000
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10000
20000
30000
40000
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10000
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30000
40000
ene-0
8
abr-
08
jul-08
oct-
08
ene-0
9
abr-
09
jul-09
oct-
09
ene-1
0
abr-
10
jul-10
oct-
10
ene-1
1
abr-
11
jul-11
oct-
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ene-1
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abr-
12
jul-12
oct-
12
ene-1
3
abr-
13
jul-13
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Global economy with cyclical weakness, above all in EM • We have reduced our world GDP growth forecast due to a less favorable global
economic scenario.
GDP Growth (Percentage)
Source: BBVA Research
* BBVA Eagles: Emerging and Growth-Leading Economies. China, India, Brazil, Indonesia, Korea, Russia, Turkey, Mexico, Taiwan.
EM have experienced a more intense deceleration of growth
Global financial tightening due to US slow recovery
In 2014 we expect a 3.8% world GDP growth
3,2 3,1
3,8
2,21,8
2,3
-0,5 -0,4
1,0
5,15,2
5,6
-2,0
0,0
2,0
4,0
6,0
8,0
-2,0
0,0
2,0
4,0
6,0
8,0
12
13
14
12
13
14
12
13
14
12
13
14
Mundo EEUU Zona Euro BBVA Eagles
ago-13 may-13
Colombia: economy will strengthen for the remainder of 2013 and 2014 even though demand remains weak
Página 7
Net flows towards Colombia remained robust • Domestic financial markets reacted to the anticipated change in US monetary
stance. Expectations of lower global liquidity weakened COP and increased risk premia.
Net capital flows (annual change, %)
Source: BanRep and BBVA Research
Financial volatility due to global uncertainty, with limited impact on fundamentals
Period was faced with slackness even though heightened sovereign debt cost
Weakeing of COP in line with the region regardless of pension funds regulatory noise -300
0
300
600
900
1200
1500
1800
-300
0
300
600
900
1200
1500
1800
mar-
09
jul-09
nov-0
9
mar-
10
jul-10
nov-1
0
mar-
11
jul-11
nov-1
1
mar-
12
jul-12
nov-1
2
mar-
13
jul-13
IED Inversión en portafolio Préstamos externos
Página 8
Heightened construction growth (17,5% annual) held back deceleration • Domestic demand was weaker than expected due to a stronger deceleration of
private consumtion and a fall in non-residential investment. A corresponding adjustment in imports was observed.
GDP and domestic demand (annual change, %)
Source: DANE and BBVA Research
-2
0
2
4
6
8
10
-2
0
2
4
6
8
10
mar-
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jun-0
9
sep
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dic
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mar-
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jun-1
0
sep
-10
dic
-10
mar-
11
jun-1
1
sep
-11
dic
-11
mar-
12
jun-1
2
sep
-12
dic
-12
mar-
13
Demanda interna PIB
Annual variation
4Q12 1Q13 Expected?
Private consumption
4,6 3,2
Private investment
5,6 3,8
Public investment
4,1 8,4
Exports 1,4 -1,2
Página 9
Stronger leading indicators during second quarter of 2013 • Gradual recovery of private consumption and slow growth of non-residential
investment. • Industry supported by foreign and domestic demand.
Available leading indicators (Seasonally adjusted,
Mar10=100) Source: DANE and BBVA Research
-12.2
2.8 1.2
-9.5
-3.5
16.0
6.0
1.6
-15
-10
-5
0
5
10
15
20
Minería yagro
Industria Otras Total
1T13 2T13
Exports by product type Annual variation, %
90
100
110
120
130
140
150
160
170
90
100
110
120
130
140
150
160
170
mar-
10
may-1
0
jul-10
sep
-10
nov-1
0
ene-1
1
mar-
11
may-1
1
jul-11
sep
-11
nov-1
1
ene-1
2
mar-
12
may-1
2
jul-12
sep
-12
nov-1
2
ene-1
3
mar-
13
may-1
3
Ventas minoristas Exportaciones
Licencias de construcción Demanda de energía de la industria
Página 10
Confidence recovery anticipates a better second half of the year • Households and businesses regained optimism about economic actvity for the
upcomming six months.
Household and business confidence (Seasonally adjusted) Source: Fedesarrollo and BBVA Research
-25
-15
-5
5
15
25
35
-25
-15
-5
5
15
25
35
mar-
08
jun-0
8
sep
-08
dic
-08
mar-
09
jun-0
9
sep
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dic
-09
mar-
10
jun-1
0
sep
-10
dic
-10
mar-
11
jun-1
1
sep
-11
dic
-11
mar-
12
jun-1
2
sep
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dic
-12
mar-
13
jun-1
3
Comerciantes Consumidores Industriales
In June, households revealed a high disposition to purchase durable goods and housing
Consumer confidence reached its minimum in March, anticipating a recovery.
Industry has gradually reduced inventory since February
Further consolidation of employment will sustain recovery in private consumption
Página 11
• Employment increased during 2Q13, but at a lower pace than in 2012. • Construction dynamism and industry recovery in 2H13 will allow employment to improve
Formal and informal employment (Number of people, in thousands)
Source: DANE and BBVA Research
3.400
3.800
4.200
4.600
5.000
5.400
3.400
3.800
4.200
4.600
5.000
5.400
Jun
-07
Se
p-0
7
Dic
-07
Mar-
08
Jun
-08
Se
p-0
8
Dic
-08
Mar-
09
Jun
-09
Se
p-0
9
Dic
-09
Mar-
10
Jun
-10
Se
p-1
0
Dic
-10
Mar-
11
Jun
-11
Se
p-1
1
Dic
-11
Mar-
12
Jun
-12
Se
p-1
2
Dic
-12
Mar-
13
Jun
-13
Asalariados No asalariados
Heightend growth during second half of 2013
Página 12
IGAE (principal component of leading indicators)
Source: BBVA Research
• Favorable statistical base and improved economic dynamics will be determining factors: construction, private consumption and exports.
• Economic activity index IGAE suggests a recovery for 2Q13, consistent with a year end 3.3% annual GDP growth.
GDP growth forecast (annual and quarterly variation)
Source: DANE and BBVA Research
-4
-2
0
2
4
6
8
10
-4
-2
0
2
4
6
8
10
jun-0
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dic
-01
jun-0
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dic
-02
jun-0
3
dic
-03
jun-0
4
dic
-04
jun-0
5
dic
-05
jun-0
6
dic
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jun-0
7
dic
-07
jun-0
8
dic
-08
jun-0
9
dic
-09
jun-1
0
dic
-10
jun-1
1
dic
-11
jun-1
2
dic
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jun-1
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PIB sin obras civiles IGAE
5.4
4.7
2.83.1
2.83.3
4.95.3
5.75.2
4.5
3.3
0.6
1.2
-0.4
1.7
0.3
1.61.2
2.1
0.81.1
0.5
1.0
-1
0
1
2
3
4
5
6
-1
0
1
2
3
4
5
6
mar-
12
jun-1
2
sep
-12
dic
-12
mar-
13
jun-1
3
sep
-13
dic
-13
mar-
14
jun-1
4
sep
-14
dic
-14
Variación anual Variación trimestral
Growth for 2013 remains at 4.1% and we revised our 2014 forecast to 4.7%
Página 13
• Economic growth in 2013 will be less sustained by domestic demand. • Domestic demand will grow by 3.8% in 2013, below GDP growth rate for the first time
since 2009.
GDP growth forecast and adjustments (annual variation and basis points change) Source: DANE and BBVA Research Construction, housing and civil
works will support 1.2 pp of GDP growth rate in 2013
We have revised downwards private consumption growth, but maintain its recovery trend since 2Q13
Imports will adjust due to lower domestic demand
Exports will have positive dynamics, above that of GDP growth from 2H13 onwards
-0.1
-0.2 -0.4
0.3
0.1
4.1
4.7
0.0
1.0
2.0
3.0
4.0
5.0
-0.6
-0.3
0.0
0.3
0.6
0.9
2013 2014
Perspectiva externa (-) Perspectiva interna (-)
Efecto de la política fiscal (+) Previsión (eje derecho)
We do not anticipate any change in monetary conditions until 2Q14
Consumer price inflation (percentage change, %)
Source: DANE and BBVA Research
Inflation will end 2013 in 2.7%
In 2014 inflation will reach slightly above the 3% mid-range target,
ending in 3.2%
• Inflation will increase gradually during the second half of the year, but well within the target range for 2013 and 2014.
• Low base effect and expected private consumption recovery will rise inflation in 2014. Constrained domestic demand has allowed for limited COP depreciation passthrough.
Inflation remains well within the target range
1,0
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2,0
2,5
3,0
3,5
4,0
4,5
5,0
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
sep
-10
dic
-10
mar-
11
jun-1
1
sep
-11
dic
-11
mar-
12
jun-1
2
sep
-12
dic
-12
mar-
13
jun-1
3
sep
-13
dic
-13
mar-
14
jun-1
4
sep
-14
dic
-14
Rango Inflación objetivo
Nominal intervention rate (%)
Source: BanRep, DANE and BBVA Research
• We expect a first interest rate hike by the central bank in April of 2014, under limited inflation pressure.
• Expansive monetary stance will remain until 2015, before the gradual closure of the product gap.
Reference interest rate ermains expansive (3,25% vs. 5,25% neutral). Central bank remains moderately optimistic about growth prospects
Expansive monetary stance will remain during the end of the year
3,00%
3,50%
4,00%
4,50%
5,00%
5,50%
6,00%
jul-13
sep
-13
nov-1
3
ene-1
4
mar-
14
may-1
4
jul-14
sep
-14
nov-1
4
ene-1
5
mar-
15
may-1
5
jul-15
sep
-15
nov-1
5
BBVAe IBR Analistas
Página 17
Central Bank will extend foreign exchange purchase program • We anticipate USD 7bn of international reserves accumulation in 2013, thereby
remaining USD 1bn for the 4th quarter • FX intervention will extend into 2014, with an estimated space of USD 6.4bn
BanRep foreign exchange market intervention and expected
reserve accumulation (annual variation, %) Source: BanRep and BBVA Research
International reserves remain below
level (11% vs. 15% optimum)
Balance of payment equilibrium level anticipates international reserves accumulation during 2014
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Acumulación observada (Julio) Compromiso Septiembre Proyección 2013
Página 18
Continued uncertainty regarding Fed QE withdrwal will increase COP volatility • COP forecast is contingent upon external monetary conditions. • COP appreciation is expected in 2014 due to economic recovery and interest rate
hikes. • Normalization of external monetary conditions will depreciate COP.
Average exchange rate and annual variation (pesos per dollar, %) Source: BanRep and BBVA Research
1.899
1.848
1.798
1.855 1.868
3,10,7
-15
-10
-5
0
5
10
15
1.500
1.550
1.600
1.650
1.700
1.750
1.800
1.850
1.900
1.950
2.000
2010 2011 2012 2013 2014
TRM promedio Variación anual promedio (eje der.)
Depreciación
Apreciación
Página 19
Main messages
• Growth decelerated in emerging economies, but a gradual recovery of developed economies consolidates
• economy slowed during the first quarter, however it did
not comprmise our year end growth forecast of 4.1% of GDP. For 2014 we expect a more robust growth rate of 4.7%
• Inflation will be slightly below the mid point of the target range in
2013 (2.7%) and slightly above in 2014 (3.2%). We do not anticipate a change in the monetary stance until the second quarter of 2014
• Uncertainty regarding the timing of the withdrawl of QE3 in the US will continue to generate volatilty in local markets
Página 20
Forecasts C olombia
201 1 201 2 201 3 201 4 201 5 201 6
GDP (% y/y) 6, 7 4, 0 4, 1 4, 7 5, 1 5, 4
P rivate Consumption (% y/y) 6, 0 4, 7 3, 5 4, 1 4, 8 5, 1
P ublic Consumption (% y/y) 3, 6 5, 1 4, 6 4, 8 3, 5 3, 9
P rivate Investment (% y/y) 1 7, 1 8, 0 4, 7 7, 7 6, 9 6, 7
Residential Investment (% y/y) 3, 7 5, 6 8, 5 7, 1 5, 5 5, 6
P ublic Investment (% y/y) 22, 8 1 , 5 9, 3 1 0, 3 9, 1 7, 0
Inflation (% y/y, eop) 3, 7 2, 4 2, 7 3, 2 3, 0 3, 0
E xchange Rate (vs. US D, eop) 1 934 1 794 1 885 1 869 1 890 1 952
P olicy Interest Rate (%, eop) 4, 75 4, 25 3, 25 4, 25 5, 25 5, 25
P olicy Interest Rate (%, average) 4, 25 4, 88 3, 25 3, 81 5, 1 9 5, 25
DTF (%, eop) 5, 1 2 5, 22 3, 74 4, 58 5, 73 5, 86
DTF(%, average) 4, 21 5, 34 4, 1 5 4, 05 5, 40 5, 80
Fiscal Balance (% GDP ) -2, 9 -2, 3 -2, 6 -2, 6 -2, 0 -1 , 9
Current Account Balance (% GDP ) -2, 9 -3, 2 -3, 1 -2, 7 -2, 7 -2, 9
S ource: DANE, S uperfinanciera, Banco de la República, Ministerio de Hacienda and BBVA Research
Página 21
Thanks
Página 22
Contacts Colombia
Juana Téllez Chief Economist [email protected]
www.bbvaresearch.com
Equipo
Mauricio Hernández [email protected]
Santiago Muñoz [email protected]
Julio César Suárez [email protected]
Interns
Natalia Montes Nicolás Ronderos
[email protected] [email protected]
María Claudia Llanes [email protected]
Página 23
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