2024 began with unfavorable projections on fronts such as the Gross Domestic Product, unemployment, stock markets, investment and the cost of living; This is as a result of the uncertainty that still exists among investors and companies and the alerts that have been generated by the attempts of the Government to remove the fiscal rule or restructure debt commitments.
Although the forecasts were not very favorable, both in the long and medium term, the passing of the months has shown a better than expected dynamic in which a technical recession was even avoided and what could well be called “ catastrophic criticisms”, as described by the Ministry of Finance. However, this would not be thanks to a recovery plan but rather due to market dynamics.
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This is observed in a recent analysis by BBVA Research, which warns that after the pandemic, the country has moved on without a clear catalyst to boost the economy and although it recognizes that between 2020 and 2022 the priority was to overcome the ravages of the Covid-19, from 2023 and at least until 2026; No sector is seen as a lever for economic growth.
Portafolio spoke with Mauricio Hernández, economist of this research teamwho indicated that it is indisputable that there are signs of recovery, but that it cannot be overlooked that the genesis is in consumption, which in turn has boosted production, although not as it should, and not in the arrival of new capital. or growth of investment dynamics.
Economic growth
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“On the consumer side we have seen better auto sales, growth in home sales and some recovery in household confidence; while on the production side, we continue to see low demand for commercial electricity and let’s not forget that when an industry turns on the machines it is because it is producing more. So, a reduction in commercial electricity demand means that we are not yet at high levels of production,” he explained.
To better express their postulate that there is no catalyst for economic growth, BBVA Research reviewed the behavior of GDP in the last 60 years and highlighted that between 1965 and 1980, the country promoted industrialization and import substitution. of coffee. Likewise, between 1981 and 1990; The leverage occurred in the energy boom and in mining, oil pipelines and coffee exports.
According to the analysis, for the period between 1991 and 1999, economic growth was driven by trade liberalization and this was followed, for the period 2000-2007, by the raw materials boom, followed by the wave of 4G roads and the push for housing between 2009 and 2019; only to have the pandemic arrive and cut off the momentum.
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“The great challenge for Colombia as an economy for the future is to find the next catalyst of the investment. It is not clear what sector or major project or major initiative will be that will raise those investment resources that were done in the past, major projects such as 4G infrastructure works, such as the construction of the Bicentenario oil pipeline, or like the housing boom that occurred before 2014,” added Hernández.
Opportunities in sight
Connecting with this report, the Dapper firm also reviewed the economic dynamics and stated that although agriculture and public administration have led almost the entire year in sustaining the GDP, lately some important growth has been seen that can mark the point starting point to address with a reactivation plan.
“The ISE grew 3.9% in July and although this result was led by The recovery of primary activities, the strength of the tertiary sector (e.g. Services, commerce, arts, public administration) makes it the leader of the reactivation. We can also see it in industrial production and retail sales. After completing several months of growth in negative territory, in July there were signs of recovery,” they added.
Investment in Colombia.
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If we add to this that there is a better performance of exports, Dapper highlighted that the economy is diversifying and undertaking a transition to the tertiary sector to take a path of recovery that appears on the horizon as an “opportunity that we cannot waste.” ”.
In this sense, Munir Jalil, chief economist of BTG Pactual for the Andean region, insists that more than timid growth, it should be said that “the Colombian economy is in a recovery process. “Things have to be called what they are.” and that to get the most out of this situation, clear playing conditions must be generated.
“The important thing here is that the investment must be recovered, that must be the starting point and because of that we must concentrate on creating options, alternatives and favorable rules of the game so that these capitals return. We must help ensure that this good step that is being observed is sustainable and projected over time,” said Jalil.
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For the BTG Pactual spokesperson, you can start by analyzing factors such as risk premiums and credit image, which are currently not going through their best moment and are playing against the arrival of capital or the acquisition of credit.
Impulse with roof
Finally, to better understand what is happening with the economic dynamics, Portafolio spoke with Camilo Herrera, founder of the firm Raddar, who asked not to overlook that as long as the country continues to depend on areas such as public administration, it will face the ceiling. of what the Government can spend, in addition to the fact that it will grow incorrectly and neglecting the true drivers.
Investment and investments.
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“Just because we are growing in the Gross Domestic Product does not mean that we are growing well, because growth is an inertial issue, systematically the economy in Colombia advances continuously. So, this story that the GDP is being grown through public administration is necessary to review because that does not necessarily boost household spending, even if one thinks that this money reaches more homes and therefore people spend more, that does not It is necessarily true, because you have to see what you are spending on,” he explained.
Herrera explained that the recovery we have at this moment originates from factors such as the lowering of interest rates by the Bank of the Republic and the fall in inflation; which have led to people being able to spend more and, in this way, generating a reactivation more associated with market dynamics.
Thus, both Camilo Herrera and the other experts who spoke and were consulted by Portafolio, stated that if this is not supported with a clear reactivation strategy, it will be difficult for the economy to grow again at the rate needed to compete with peers in the region.
