The Fedesarrollo Economic and Social Research Center released this Friday -November 8- the updated results of the Economic Policy Uncertainty Index in Colombia (Ipec) for October, in which there is an improvement in people’s spirits in month by month, but the growth of concerns regarding the data seen in the same period in 2023.
According to the data presented, the Ipec stood at 194, which is equivalent to a decrease of 75 points compared to September 2024 (269) and an increase of 20 points compared to the record of October 2023 (174); thus fulfilling 63 months above the average observed between 2000 and 2019 (100).
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To better understand how this indicator works, Fedesarrollo has explained that the Ipec “captures the uncertainty of economic policy in Colombia on a monthly basis and with a sectoral focus, through the count of words related to the situation in news from the media. communication”.
“From a historical perspective, the Ipec captures periods of high uncertainty in economic policy, linked to episodes such as the economic emergency of 1996, the financial crisis of 1999, the fall in oil prices between 2014 and 2016, the Covid pandemic -19 in 2020 and the peak of the risk premium in October 20222,” they noted in the report.
Insecurity
Although uncertainty remains high, Fedesarrollo highlighted that for the first time in a year, this reference was at levels below 200 points; even leaving an average of 248, 8 points below the average for the same period in the previous year (256), and 1 point above the average for the entire year 2023 (247).
This means that citizens’ spirits are once again fading. calming down the risks that exist in the country in terms of security, economy, politics, social work and financial variables, among others. However, it must be said that it is still at very high levels, compared to previous periods.
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What is worrying?
Now, understanding what is generating uncertainty among Colombians, it must be said that in the month of October 2024, 43.7% of Ipec news focused on the topic of economic, social and geopolitical policy, followed by economic activity (21.8%), insecurity (14.5%), others (10.9%) and financial variables (9.1%).
Likewise, in a general view of what has been this yearin Fedesarrollo reported that 53.7% of the reports focused on economic, social and geopolitical policy issues, followed by economic activity (15.1%) and others (11.2%).
Economic recession
“Compared to the previous month, the categories that grew in participation were insecurity (6.6 percentage points) and financial variables (2.5 percentage points). For their part, the categories of economic, social and geopolitical policy, economic activity and others showed a drop compared to the previous month of 6.3, 1.9 and 0.9 percentage points, respectively,” they added.
Finally, it must be said that, with respect to October 2023, the sectors of economic activity and financial variables were the ones that presented increases in the participation of the sectoral classification (12.2 and 3.3 percentage points, respectively), while the sectors of others, insecurity and economic, social and geopolitical policy showed reductions in their participation (-10.3, -4.7 and -0.5 percentage points, respectively).
