Presentación de PowerPoint · Source: DANE. Seasonally adjusted 10,0 11,2 5,4 11,2 10,7 11,6 7,2...

Colombia 2020Ana Fernanda MaiguashcaJanuary 2020

1* The opinions presented here are personal and do not represent the official position of the Banco de la República or its Board of Directors.

20/0

1/20

20

2

Co

nte

nts

Growth

Inflation and Policy Responses

External Balance

Risks

• The decade begins after five years of below historic growth adjusting after the terms-of-trade shock.

3

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

Last 30 years Last 20 years Last 10 years Last 5 years

Average Annual GDP Growth Rate in Latin America

Argentina Brazil Chile Colombia Ecuador Mexico Paraguay Peru Uruguay

Source: International Monetary Fund. Banrep's calculations. Includes 2019 forecasts.

• The ToT shock is the common denominator for the region.

• The Colombian economy adjusted successfully despite facing a larger shock relative to other countries.

Source: Banco de la República and IMF Regional Economic Outlook April 2017. *Peak and trough are defined using annual data for 2010-2016. For ToT the peak to trough are defined using annual data for Bol, Col, and Ven correspond to 2012 to 2016; for Ecu and Per to 2011 to 2016; for Bra to 2011 to 2015; for Chl to 2010 to 2016; for Arg to 2014 to 2015; and for Mex to 2013 to 2015. For the graph on the right: bars with pattern denote country with a managed exchange rate regime.

4

Terms-of-Trade Movements 2010-2015*(Peak to trough, percent change)

• Timing seems to have been slightly different: Colombia moving later than the rest of the region.

• Internal demand and consumption in Colombia has recovered strongly after the adjustment.

Source: Central Banks. For Chile, households consumption includes NPISH.5

-1%

0%

1%

2%

3%

4%

5%

6%

7%Internal Demand

(Real Annual Growth Rate)

Peru Colombia

0%

1%

2%

3%

4%

5%

6%

Household Consumption(Real Annual Growth Rate)

Peru Colombia

Source: Banco de la República and Consensus forecast. Analysts forecasts are the median of consensus forecasts individual predictions.6

• Forecasts suggest that dynamism will continue through 2020, amidst an uncertain global environment.

3,10%3,20%

3,30%

2,0%

1,4%

2,7%

3,2% 3,3%

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

2016 2017 2018 2019 2020 2021

Growth Forecasts

Analysts forecasts

BanRep's forecasts

Observed growth

7

• Growth is responding to a dynamic domestic demand.

• Central Bank estimates a growth rate of 3.2% for 2019 and forecasts 3.3% in 2020.

Source: DANE and Banco de la República.

4,8%

3,3%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III

2012 2013 2014 2015 2016 2017 2018 2019

GDP and Domestic Demand(Annual Growth Rate)

Domestic Demand GDP

8

• Investment remains strong, except for the housing sector; machinery and equipment is growing significantly. Some deceleration is expected for 2020 but other components should pick up.

8,6

%

7,0

%

-3,8

%

6,6

% 11

,1%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%Investment and its Components

(Annual Growth Rate)

2017Q4 2019Q3

GKF INVESTMENT

HOUSING

OTHER BUILDINGS

MACHINERY AND EQUIPMENT

Source: DANE. Calculations by Banco de la República

5,02%

-30

-20

-10

0

10

20

30

40

-1

0

1

2

3

4

5

6

7

8

Co

nsu

mer

co

nfi

den

ce I

nd

ex

%

Consumption and Consumer Confidence

Household Consumption (AnnualGrowth Rate)Consumer Confidence Index (RHS)

Decoupling

Source: DANE and Fedesarrollo

• Consumption is growing at a fast rate, though a disconnection with consumer sentiment persists.

• A strong growth of consumer loans is supporting household consumption.

Source: Financial Superintendence and Banco de la República

10

4.4%

0.08%

6.4%

11.6%

-5

-3

-1

1

3

5

7

9

11

13

15

Jan

-16

Mar

-16

May

-16

Jul-

16

Sep

-16

No

v-1

6

Jan

-17

Mar

-17

May

-17

Jul-

17

Sep

-17

No

v-1

7

Jan

-18

Mar

-18

May

-18

Jul-

18

Sep

-18

No

v-1

8

Jan

-19

Mar

-19

May

-19

Jul-

19

Sep

-19

No

v-1

9

%Loan Portfolio

(Real Annual Growth Rate)TotalCommercialMortgageConsumption

Source: DANE. Seasonally adjusted

10,0

11,2

5,4

11,210,7

11,6

7,2

11,3

0

2

4

6

8

10

12

14

National Total Urban Centers Rural Areas 13 Main MetropolitanAreas

%

Unemployment Rate(Quarterly moving average Sep-Nov)

2015

2016

2017

2018

2019

• The labor market has been showing weakness that contrasts with the dynamics of internal demand. Unemployment rate has increased compared to previous years. The increment is most noticeable in rural areas. It is difficult to assess the migration effect, given the scale of this phenomenon.

20/0

1/20

20

12

Co

nte

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Growth


External Balance

Risks

• In a decelerating scenario for the global economy, the growth of Colombia’s trading partners is expected to slow down.

¹ USA, Euro area, China, Brazil, Ecuador, Peru, México, Chile. Weighted by non-traditional exports.

*Forecast. Source: Banco de la República and Departamento Administrativo Nacional de Estadística – DANE. 13

2.2%2,1%

2,4% 1,5% 1,7% 1,8%

-10%

-5%

0%

5%

10%

15%

20%

-2%

0%

2%

4%

6%

8%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019* 2020* 2021*

Average Growth of Colombia’s Main Trading Partners and Exports Growth

Mar. 19 forecast Current forecast Growth of Non-traditional exports* (RHS)

• The rebound in domestic demand plus a weaker external demand is causing a widening of the current account deficit.

Source: IMF (WEO) estimates. For Colombia: BanRep’s estimates.

14

-3,3%-3,9%

-4,5% -4,6%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019(forecast)

2020 (forecast)

Current Account(% of GDP)

Mexico Chile Peru Colombia

Source: Banco de la República

• However, consumption goods represent only a small fraction of total imports, rendering a “productive” CAD.

15

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000U

SD M

illio

n

Imports

Capital Goods Intermediate Goods Consumption Goods

• Which has been mostly financed by FDI, mitigating part of the vulnerability of the large CAD.

Source: Banco de la República. 16

-1

1

3

5

7

9

11

2011 2012 2013 2014 2015 2016 2017 2018 2019 (jan -sep)

% o

f G

DP

Investment Flows and Current Account Deficit Foreign Direct Investment GrossInflows

Portfolio Investment GrossInflows

Other Investment Gross Inflows

Current Account Deficit

• Trade balance and factor income explain the current account deficit, partially offset by the net income of current transfers. Factor income has already proved to move countercyclically.

Source: Banco de la República. 17

-7

-6

-5

-4

-3

-2

-1

0

-30.000

-25.000

-20.000

-15.000

-10.000

-5.000

0

5.000

10.000

15.000

Cu

rren

t A

cco

un

t -

% o

f G

DP

USD

mill

ion

Current Account

Goods and services Primary Income (Factor income) Secondary Income (Transfers) Current Account (% GDP) (RHS)

Source: Banco de la República

18

$ 1.500

$ 1.700

$ 1.900

$ 2.100

$ 2.300

$ 2.500

$ 2.700

$ 2.900

$ 3.100

$ 3.300

$ 3.500

Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20

USD/COP Exchange Rate

• A floating exchange rate is a crucial piece of the policy framework.

• Currency mismatches remain low in both the real and financial sector, and they concentrate in companies that either export, hedge or have FDI

19*For the categories: debt due to suppliers in foreign currency, foreign currency leasing and “other”, the information is insufficient to determine if firms hedge these debts.

Source: Banco de la República, Financial Superintendency and DANE

32,11

4,40

3,27

1,11

1,642,21

0

10

20

30

40

50

60

2010 2011 2012 2013 2014 2015 2016 2017 2018 jun-19

Debt of the corporate sector by currency and hedge(% of GDP)

Local Currency Debt Exporters Debt

Non-exporters Debt with FDI Non-exporters Debt with FDI (Unhedged)

External suppliers in foreign currency External Leasing in foreign currency

Other

20/0

1/20

20

20

Co

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Growth


External Balance

Risks

• Inflation expectations are close to the 3% target over the policy horizon. • Central Bank estimates convergence to target by December 2020.

Source: DANE and Banco de la República – Monthly Survey of Economic Expectations21

3,36%

3,25%

3,80%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-19

Inflation and Inflation Expectations

Average of 1-year Ahead Expectations

Average of 2-year Ahead Expectations

Headline Inflation


• There was a temporary shock to food inflation throughout 2019, that started to fade.

22

5,2%

0%

4%

8%

12%

16%

20%


Food Inflation


• Although passthrough is low, there was some impact of depreciation in tradable and headline inflation.

23

3,1%

2,2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%


Tradable inflation

Tradables

Tradables excluding food and regulateditems


• Non tradable inflation fell during H2 2019 reflecting few structural pressures in the inflationary process.

24

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%


Non-tradable inflation

Non-tradable

Non-tradable excluding food andregulating items

Source: DANE. Calculations by Banco de la República. The “Core 20” inflation measure excludes the CPI components with the largest price volatility representing 20% of the CPI basket.

• Core inflation indicators reflected too a temporary shock, most probably affected by exchange rate, though it was a small deviation.

25

3,4%

3,4%

3,5%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%


Core Inflation

CPI Excluding food

Core 20

Source: Banco de la República.

26

• In this scenario monetary policy has remained moderately expansionary, supporting the closing of the negative output gap.

Source: Banco de la República. * Observed real interest rate minus an estimate.

4,50%

7,75%

4,25%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Jun

-19

Sep

-19

Dec

-19

Policy Rate

-3%

-2%

-1%

0%

1%

2%

3%

4%

20

14

Q1

20

14

Q2

20

14

Q3

20

14

Q4

20

15

Q1

20

15

Q2

20

15

Q3

20

15

Q4

20

16

Q1

20

16

Q2

20

16

Q3

20

16

Q4

20

17

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

18

Q1

20

18

Q2

20

18

Q3

20

18

Q4

20

19

Q1

20

19

Q2

20

19

Q3

20

19

Q4

Real interest rate gap

20/0

1/20

20

27

Co

nte

nts

Growth


External Balance

Risks

28

Global Uncertainty

New Normal

Trade

Discontent

MPNeutral Interest

RateCAD

29

Thank you

Presentación de PowerPoint · Source: DANE. Seasonally adjusted 10,0 11,2 5,4 11,2 10,7 11,6 7,2...

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