Presidential election in Colombia is close, and the president wants to get the reelection for 2014 to 2018. Nonetheless, the economic environment during elections in 2014 could be in middle of economic downturn. While some countries in the region show an upward trend in their GDP growth such as Chile and Peru, others such as Colombia shows a downward trend in GDP growth; Colombia could face in the best of cases a GDP growth of 3.8% in 2013. Many international and local agencies point this fact, but central government do not pay attention. Moreover, ministers of Finance, Labor and Trade in Colombia have not shown a proper job in terms of job creation and income distribution. Colombia has not shown advances in declining unemployment rate, it has been between 8.9% and 13.8% during these last 3 years.
Moreover, the worst thing, the middle class is abandoned by public policies until point major degree students take their life away by themselves. Teachers from main universities have not shown changes since these events happened, some of them remain showing off the weakness of their students instead of support them. What society we hope if there are not public policies and teachers that care students and juveniles’ economic opportunities!!!.
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
Twitter: Humberto_Bernal
Since 2011 Colombia has shown a poor economic growth compared with other countries in the region, and it is likely that she will face an economic downturn in 2014. Colombia showed an economic growth of 6.6% in 2011, 4.0% in 2012 and it is expected an economic growth between 3.4% and 4.2% in 2013. Government broadcast a Gross Domestic Product (GDP) growth rate forecast of 4.5% for 2013, but my forecast is 3.1%. The most accurate forecast can be the average of main economic agencies forecasts, and it was 3.8%. Table 1 shows these forecasts; for instance, International Monetary Found (IMF) broadcasted a GDP growth rate of 4.1% in 2013; the Economist (the weekly international review) broadcasted 4.0%; the World Bank was 3.9%; and Euromonitor (international private agency) was 3.6%.
Table 1. GDP growth rate forecast for 2013
(Foreign and local agencies, %)
Agency
|
World
|
Latin America
|
Colombia
|
Data of last publication
|
DNP (Colombia government)
|
4.5
|
June 2012
|
||
IMF
|
3.3
|
3.4
|
4.1
|
April 2013
|
The Economist
|
2.0
|
3.3
|
4.0
|
September 2013
|
Colombia Central Bank
|
4.0
|
September 2013
|
||
ECLAC (UN)
|
3.0
|
4.0
|
June 2013
|
|
World Bank
|
2.2
|
3.3
|
3.9
|
June 2013
|
ANIF (Colombia private firm)
|
3.8
|
September 2013
|
||
Fedesarrollo (Colombia private firm)
|
3.8
|
March 2013
|
||
Euromonitor
|
3.0
|
2.4
|
3.6
|
September 2013
|
Humberto’s
|
3.1
|
September 2013
|
||
Average
|
2.6
|
3.0
|
3.8
|
Sample
|
Standard Deviation
|
0.6
|
0.4
|
0.4
|
Sample
|
Source: Collecting from agency.
Other countries in the region show higher GDP growth rates and great economic advances. Peru and Chile are expected that they show a GDP growth rates above of 4.0% in 2013 according to ECLAC and IMF. Other countries such as Argentina and Brazil show upward tendency in their economic growth; in the first case was 1.9% in 2012 and is expected 2.8% or more for 2013; in the second case was 0.9% in 2012 and is expected 2.5% or more for 2013. However, there are other countries that show a downward tendency; for instance Colombia showed a GDP growth of 4.0% in 2012 and is expected a 3.8% or less in 2013.
Likely economic downturn from 2014 in Colombia
Colombia could face an economic downturn from 2014 because her main economic variables shows a poor dynamic. First, Colombian economic growth shows lower growth rates since 2011. Second, her main economic partners show low economic growth; for instance, the United States is expected an economic growth of 1.7% in 2013; China could face a growth of 7.6% in 2013; and the worst case is Germany that could face a negative growth in 2013 as table 2 shows. Germany is taking an important place in Colombian international trade; nowadays, Germany takes the 5th place in main Colombia economic partners. Finally, other variables that help to make a forecasts of my 3.1% for Colombian GDP growth in 2013 are a production of million of crude oil barrels per day; 8.5 million of sack of coffee through 2013; an unemployment rate of 9.4% at the end of 2013; and a Market Index of 14,492 points; it means a Market Index decline of 0.4% compared with its value in 2012.
Table 2. Colombia economic variables forecasts 2013
Variable
|
Forecasts
|
Crude Oil Colombia
(Average barrels per day)
|
1,000,678
|
Coffee Colombia
(Annual sacks of 60kg)
|
8,534,779
|
IGBC
(Market Index Colombia)
|
14,492
|
Unemployment Colombia
(Rate %)
|
9.4%
|
GDP USA
(Annual growth)
|
1.7%
|
GDP China
(Annual growth)
|
7.6%
|
GDP Germany
(Annual growth)
|
-0.2%
|
GDP Colombia 2013
(Annual growth)
|
3.1%
|
Source: Bureau of Statistics (DANE) Colombia; Bureau of Statistics and Central Banks according to country and own calculations VEC methodology Stata 12.1.
Colombia middle class abandoned, students take their life away by themselves
The Colombian GDP cycle could show a downward path from first quarter 2014 as figure 1 shows, so Colombia could face an economic downturn when presidential election takes place. According to my forecast, Colombia GDP cycle can change its tendency because Central Government has not paid attention to industrial development and ministers of Finance, Labor and Trade have not worked properly on job creation and income distribution. The middle class in Colombia is abandoned; graduate students feel disappointed because there are not fair job places and their returns for their study investments is low and generate losses. This neglect has generated that students that are close to get their major degrees take their life away by themselves!!!; what poor society in Colombia we have. Moreover, teachers from main universities do not understand that they have to change their teaching behavior. They have to support their students instead to show off their weaknesses. I will work on this issue in my next notes; meanwhile, both economic and social behavior point that Colombia could face economic downturn at the beginning of 2014; what critical issue for reelection.
Figure 1. Colombia GDP cycle 1977-2016
(quarterly data, forecasts from 2013:3)
No comments:
Post a Comment