Colombia – United States FTA Turns 1 Year Old
The U.S. – Colombia Free Trade Agreement (FTA) turned 1 year old on May 15. There were numerous events to commemorate the date including the visit by the Acting Secretary of Commerce, Dr. Rebecca Blank, leading an infrastructure mission of 20 U.S. companies. President Santos celebrated the FTA’s first birthday in Cartagena, where he had welcomed the FTA’s entry into force with the first shipment of Colombian products the year before. Over 114,000 containers passed through the Cartagena Port since the FTA entered into force – over 5,000 containers more than the previous year. U.S. exports to Colombia have increased 20% from May 15, 2012 through February 2013 relative to 2011.
Colombia Third Destination of FDI in Latin America
According to the United Nations Economic Commission for Latin America and the Caribbean, ECLAC, Colombia ranked third in the region last year as an FDI destination, attracting US$15.8 billion. Brazil was the principal destination with US$ 65.2 billion and Chile ranked second with US$ 30.2 billion.
Coal Production Declined
During the 1Q of the year, coal production in Colombia declined to 18.4 million tons, or 21.4% less than during the same period of the previous year.
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Colombian Government Introduces Economic Stimulus Plan
President Santos announced April 16 new measures aimed at boosting economic growth and slowing peso appreciation. Under its US$ 2.74 billion “Support Plan for Productivity and Employment (PIPE),” the GOC hopes to achieve 4.8% GDP growth this year. Among the most important measures are: an exchange rate target of 1,900 Colombian pesos per dollar (the current exchange rate is 1,825 pesos per dollar); employer payroll tax reductions; increased infrastructure investment; interest rate reductions from 12.5% to 7% for mortgages on new houses; and the hiring of 2,500 new policemen.
Colombian Poverty Rate Fell to 32.7% in 2012
According to the Colombian National Statistics Department, the poverty rate for 2012 decreased to 32.7% from 34.1% in 2011. Poverty in urban areas dropped from 30.3% to 28.4%. However, poverty in rural areas rose from 46.1% to 46.8%. Extreme poverty decreased 0.2% to 10.4%. Press reported President Santos’s statement that some 1.7 million people had been lifted out of poverty during his administration.
Colombian Companies on Forbes 2,000 Biggest Companies List
Five Colombian companies were included among the top 2,000 biggest companies ranked by Forbes Magazine in 2013. Due to the good performance of the Colombian stock exchange, all five companies climbed positions in this year’s ranking. The five companies included are: Ecopetrol (oil); Bancolombia (banking); Grupo Aval (banking); Davivienda (banking); and Argos (cement). Rankings range from 114 (Ecopetrol) to 1,594 (Argos).
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Colombia 66th of 144 Countries in Technology Development
According to the World Economic Forum’s 2013 Global Information Technology Report, Colombia climbed from 73rd to 66th among 144 countries on the Networked Readiness Index.
Proexport, the Colombian export and investment promotion agency, launched its new campaign to attract foreign tourists to Colombia. The goal is to double the number of visitors by 2014 to four million, which will generate an estimated US$4 billion in revenue.
Inflation for March 0.21%
Inflation for the first quarter of this year came in at 0.95%. The Colombian Central Bank’s inflation target for 2013 is 3 percent. The three sectors with the highest price increases during March were: communications (1.85%), health (0.67%) and transportation (0.54%).
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2012 FDI into Colombia Totaled US $15.8 Billion
According to the Ministry of Trade, Foreign Direct Investment (FDI) flow into Co-lombia reached a record high of US $15.8 billion in 2012. This figure represents an increase of 17.8% over 2011 FDI. FDI in industry totaled US $2 billion, a growth of 159%, while FDI in non oil or mining sectors totaled US $8.12 billion.
Central Bank Cuts Interest Rate to Boost Economic Activity
The Colombian Central Bank reduced its interest rate to 3.25%, the fifth con-secutive decrease since July 2012, bringing the current rate to its lowest level since February 2005. The Bank’s board of directors made the decision in an at-tempt to boost economic activity in response to the Colombian economy’s levels of growth, which are currently below the country’s economic potential.
Colombia’s 2012 Foreign Debt Grew 3.6%
Although Colombia’s foreign debt grew 3.6% in 2012, the increase was consid-erably lower than in 2011 (17.2%) and 2010 (20.5%). Private and public foreign debt in 2012 grew by US $2.7 billion.
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Colombian Economy Grew 4% in 2012
The Colombian National Statistics Department (DANE) announced that the country’s GDP growth rate for 2012 was 4%. This result surprised many, as the Ministry of Finance had projected a growth of 3.8%. The sectors that led the growth were mining (5.9%), financial services (5.5%), commerce (4.1%), and transportation (4%). Meanwhile, industry (-0.7%) and agriculture (2.6%) had the poorest performances.
Post-FTA Trade Missions Indicate Increased Interest
Since the FTA between Colombia and the U.S. entered into force on May 15, 2012, 13 trade missions from the U.S. have visited Colombia, highlighting an increased interest among U.S. companies in the Colombian market . The trade missions have focused on a range of issues such as private equity and franchises and have represented states such as Florida, Massachusetts, and North Dakota.
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Fitch Revises Colombia’s Outlook to Positive
The international ratings company upgraded its outlook for the Colombian economy from stable to positive. The country’s current BBB- rating is the lowest level for an investment grade status, but the improved outlook opens the door for a future rating upgrade.
Cerrejon Labor Strike Ends
Cerrejon, Colombia’s largest coal producer, reached an agreement with workers ending a 29-day labor strike that resulted in company losses of approximately 60 million dollars.
Inflation for February 0.44
According to Colombia’s National Statistics Department, the monthly inflation rate for February was 0.44%, which is the lowest rate for the last five years. The Colombian government inflation goal for 2013 is 3%.
Five Colombian Billionaires on Forbes Most Wealthy List
Colombia has five billionaires in Forbes’ recently released 2013 ranking of the world’s richest people. In order: Luis Carlos Sarmiento Angulo (64th – Banking), Alejandro Santo Domingo (82nd – Diversified Investments), Carlos Ardila Lulle (225th – Beverages), Jaime Gilinski (613th – Banking), and Woods Staton (1,268th – Restaurants).
Colombia and Costa Rica Conclude FTA Negotiations
The two countries successfully concluded negotiations for an FTA and plan to sign the official document May 23 during the next Pacific Alliance meeting in Cali. The agreement is expected to enter into force in 2014 or 2015 and will immediately eliminate duties on 75 percent of industrial products and 60 percent of agricultural products.
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2012 a Record Year for Foreign Trade
Colombia had a record year for foreign trade in 2012. According to the National Statistics Department (DANE), from January-December 2012, the country exported US$ 60.6 billion FOB and imported US$ 58.6 billion CIF for a trade balance of US$ 4.9 billion FOB. Imports showed a 7.2% growth over 2011. Exports showed 5.7% growth over 2011.
Biggest Colombian Financial Acquisition Abroad
Bancolombia S.A., Colombia’s biggest private bank, acquired the operations of HSBC Panama for US$ 2.1 billion. This transaction is the largest of any Colombian financial institution, surpassing the acquisition of BAC Credomatic in Central America by Colombia’s Grupo Aval for US$ 1.9 billion in 2010.
Colombia Signs Free Trade Agreement with South Korea
Minister of Trade Sergio Diaz-Granados and his South Korean counterpart signed the agreement on February 21 in Seoul. Congresses from both countries must now ratify the FTA before it enters into force.
Two New Board Members for the Central Bank
President Santos announced his new appointees for the Central Bank (Banco de la Republica) board of directors on February 21. Deputy Finance Minister Ana Fernanda Maiguashca and economist Adolfo Meisel, who heads the Central Bank’s branch in Cartagena, were chosen by the President to be the board’s co-directors.
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by Laura Lochman, Economic Counselor, U.S. Embassy Bogota
Over the past decade, Colombia has dramatically improved security throughout the country with the help of more than $8 billion in U.S. government assistance, and has achieved an average economic growth rate of 5 percent. The entry into force of the U.S.-Colombia Trade Promotion Agreement (TPA) on May 15, 2012, and the nine other free trade agreements Colombia now has in force, provide additional opportunities for Colombian economic expansion.
Although Colombia still faces challenges, including infrastructure deficiencies and income inequality, the country of 46 million boasts a growing economy with investment grade status, a rising middle class, and a government that is committed to democratic prosperity and regional leadership.
Since taking office in August 2010, the Santos Administration has demonstrated political will to create the conditions for economic development, job growth, and poverty reduction. Sound fiscal and macroeconomic management allowed Colombia to claim the triple crown of seeing its credit ratings increased to ‘Investment Grade’ level by Standard and Poor’s, Moody’s and Fitch Ratings. Colombia has reduced the unemployment rate to single digits (8.9 percent in October 2012), kept inflation in check (currently less than 3 percent), and attracted record foreign direct investment (FDI) of more than $13 billion in 2011 – a 50 percent increase over the previous year. For the two first quarters of 2012, the Central Bank recorded FDI of $7.8 billion, and the government expects total 2012 FDI to exceed $15 billion. About 250 U.S. companies operate in Colombia, with FDI concentrated in mining, hydrocarbons, and manufacturing (followed by consumer products, high tech, and franchising).
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Coal Production for 2012 Lower than Expected
According to Colombia’s National Mining Agency, coal production for 2012 reached 89.2 million tons, falling short of the government’s goal of 97 million tons.
Industrial Activity Grew 0.7% in 2012
According to the National Business Association of Colombia (ANDI), manufacturing production grew only 0.7% in 2012.
Colombian Investment in Road Reconstruction
The Colombian National Risk Management Agency announced that it will invest US $88.3 million in the acquisition of heavy machinery for the reconstruction of roads affected by the rainy season. The machinery will be part of a program that would make resources available to municipalities and departments to allow them to update their secondary roads. For more information on the process contact Sandra Calvo, email@example.com .
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Colombia Produces More Than 1 Million Barrels of Oil per Day
The Colombian government announced that during January 2013, the country reached an average daily oil production of 1,011,992 barrels.
Inflation Rate for January 0.30 %
This rate is 0.43 points less than the January 2012 inflation rate of 0.73%.
Record Trade Results between the U.S. and Colombia
Assistant Secretary for the Bureau of Economic and Business Affairs of the Department of State, José Fernandez, declared that according to preliminary data, bilateral trade between the U.S. and Colombia registered a historic record during 2012 upon the implementation of the Free Trade agreement in May. In comparison to 2011, U.S. experts assert that U.S. exports to Colombia rose more than US $1 billion.
South Korea – Colombia Free Trade Agreement
South Korea’s government approved the Free Trade Agreement with Colombia negotiated since 2009. The governments will sign the agreement on February 21, 2013, and then submit it to their respective legislatures for approval.
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