The Bank of Bogotá presented this week its updated economic projections for Colombia for the remainder of 2024 and next year, and warned that the country is entering an unfavorable scenario for fronts such as tax collection and the labor market, due to the dynamics supported by consumption that they are observing these days.
Camilo Pérez, head of Economic Research at the bank, assured that despite the challenges facing the local economy, it should be noted that the results obtained in indicators such as the Ise or the GDP have been better than expected and that what is What to do is pay attention to the particularities of the data, to understand which fronts of the economy require special attention.
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However, their growth projections were in the same line of a large part of the market, aiming for 1.6% by 2024 and 2.6% by 2025; emphasizing that depending on the decisions that are made going forward to mitigate fiscal risks and recover the investment, these data could be better than expected.
“What we have seen is that the consumer recovers more than the economy in general. After all that period, pandemic and post-pandemic, finally, consumption patterns have been adjusted and we are now targeting retail trade, retail sales, with growth, after a long time of declines, generating a favorable outlook ”Perez said.
Economic growth
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On the other hand, they report that the service sectors, more labor intensive than the traditional sectors, have mitigated the deterioration of the labor market, which for them is good, but insufficient since the economy is growing slowly, due to pillars such as industry and Construction and employment remain in the red and need a reactivation plan as soon as possible.
“If what grows the most is services, but what generates the most taxes were normally the traditional sectors, at least in the past, then my tax issue is going to be undone a bit. There is a reason why we are seeing the collection as weak as we see it,” they noted from the Banco de Bogotá.
Labor market
These analysts also reviewed employment generation in Colombia and they stated that although the public administration has boosted employment in recent months, the trend shows a slowdown, especially in the latest data for August and September, where the public sector has reduced its contribution to job creation. Likewise, they said that their accounts show a deterioration in the labor market.
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“These structural changes in the economy lead us to a situation in which the deterioration in employment is very small, much smaller than one would have anticipated with the models we have, because if the economy accelerates, then that implies that employment new that is finally not happening. The reality is that this deterioration did occur and now we have to deal with it,” they added.
To better explain what is happening with employment in Colombia, they explained that the aforementioned adjustment is due to the cut in public spending that ended up impacting the generation dynamics of this line, although they suggest that it cannot be ignored that the number of people who left the labor market has also increased, which could raise unemployment rates if these people do not find employment quickly.
“Basically, many people who were in the labor market, for one reason or another, have been looking for a job for a long time and get tired of doing so. That is to say, there are good signs but the variation in the workforce is very large. In a single month we have 250,000 people leaving this group, but if tomorrow they decide to return, that immediately increases unemployment,” said Pérez.
Bank of Bogotá
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Bad perceptions
Another point that for Banco de Bogotá deserves special attentionhas to do with the perception of businessmen and investor confidence, since for them it is not going through its best moment and requires a change in the way it has been treated, since it translates into a flight of capital that does not It does good for the economy.
That said, Camilo Pérez poses a paradox in which, from his perspective, businessmen’s perception of the economy has been consistently negative in the last two years, remaining below the historical average. However, he recognizes that the sentiment on social networks towards the president has been slightly positive, showing a disconnection between business perception and public perception.
“This does leave me very thoughtful about the next electoral cycle and about how much economic impact there may be from now on due to these sociopolitical changes that we are experiencing. All of that requires you to look at it. carefully, because it will be fundamental for what comes in the future,” said the economist.
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For the Bank of Bogotá, it is not only Colombia, but the global economy that faces risks in the future, giving as an example what is happening with the stagnation in Europe (especially Germany) and the slowdown in China, which for them could affect the growth in Colombia. Additionally, the geopolitical environment, along with the possibility of local strikes, creates uncertainty.
Finally, regarding inflation, they indicated that although it has been reducedsectors such as services and leasing, slowly decrease; Therefore, they expect this indicator to close around 5.3% or 5.4% by 2024 and approach 4% in 2025, although they do not rule out that the inflationary objectives of the Bank of the Republic could not be met, posing challenges for monetary policy.
The new indicators allow us not only to observe the weight that each company gives to its values, and to compare itself with its main competitors.
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“Increases in the price of diesel are not considered a significant risk due to their gradual nature. However, the lack of rain and the low level of the reservoirs represent a risk for the energy sector, which could impact the economy,” they stated.
The report on the current state of the economy closed by calling for close monitoring of the different aspects already mentioned, warning that although there are notable improvements in the pace of growth, this is not a sign of victory and requiresOn the contrary, a greater commitment from the monetary authorities.
