Comentario económico 8 de noviembre de 2021

Logistics

2022 is going to be a big year for the political calendar, kicking off with the legislative vote on March 13 scheduled in tandem with presidential primaries. Official presidential elections follow the consultations, which serve as the primary vote in Colombia, on May 29, with a potential runoff scheduled for June 19 if necessary.

On the congressional front, Colombians will head to the polls for a legislative vote on March 13. The election will determine every seat of the bicameral system: 172 seats for the House of Representatives and 108 seats for the Senate. The right-wing Democratic Center party currently holds the majority of seats in both houses, and the party’s Ivan Duque Marquez sits at the presidential post. Once the vote is in, newly elected officials will serve for four years. The final makeup of the legislature could unveil what markets could expect from the subsequent presidential race. It could point ot shifting dynamics away from conservatism and towards a more central regime within the political arena.

What to watch

With the presidential candidates not yet established, we are patient. Citi Economics notes that although some presidential campaigning has begun, there should not be any major events until March 2022, when parties put forward a candidate hold primaries. So far, our economists have flagged interest in primaries from coalitions including Pacto Historico por Colombia (left wing), Coalicion de la Esperanza (center left wing), Centro Democrático (ring wing and currently in power), and Coalicion de las Regiones (center right wing); however, recent observations have shown the candidate pool, which now finds 60 people in line for the race, becoming more and more centrist. Incumbent president Marquez is not eligible for a second term.

COLOMBIA

The National Government projects that the Colombian economy will grow 8.5% this year. President Iván Duque assured that the Colombian economy would grow 8.5% this year. The Minister of Finance, José Manuel Restrepo, stressed that this is good news because it reflects the effectiveness of the economic reactivation that has occurred throughout the year. Restrepo added that analysts have positioned Colombia as one of the most effective countries in terms of economic recovery during a year in which it was committed to recovering normality prepandemic. The minister explained that domestic demand has shown good behaviour in terms of consumption and this is one of the reasons for having high expectations of economic growth. Non-mining exports were also highlighted by the official. Regarding employment, Restrepo assured that 88% of the positions that were lost during the pandemic in 2020 have been recovered.

Between January and October 2021, foreign investors were loaded with COP 12.7 billion in TES and the Banco de la República, with $ 11.1 billion. According to the most recent figures from the Public Credit Directorate, foreign investors sold TES again in October for the second consecutive month. Although foreigners got rid of a smaller amount compared to September, it reached COP 269 billion. On the other hand, Banco de la República acquired, for the third consecutive month, debt securities of the Colombian Government. In October, the amount was COP 4.93 trillion. In the 10th month, pension funds seize COP 1.62 trillion in government bonds, while commercial banks acquired COP 2.79 trillion in these bonds. On the contrary, the Ministry of Finance settled COP 2.13 trillion in Treasury Securities (TES). Now, between January and October 2021, foreign investors were loaded with COP 12.7 trillion in TES and Banco de la República, with COP 11.1 trillion. According to figures from the Public Credit Directorate, the pension funds, in this same period, bought COP 6.61 trillion in these public debt bonds; insurance companies and collective investment funds, COP 5.12 trillion; the Ministry of Finance, COP 3.86 trillion; commercial banks, COP 3.57 trillion; the rest of the public sector, COP 4.83 trillion; and the rest of the financial sector, COP 2.58 trillion.

Asobancaria asks BanRep to resume the gradual increase in rates and raise them, maximum, by 75 basis between now and the end of 2022. The 50-basic increase in Banco de la República intervention rate was above that expected by the Banking Association and Financial Institutions (Asobancaria), which expected an increase closer to 25 basis points. However, according to the head of the union, Hernando José Gómez, this higher pressure does not imply that there will be a brake on economic activity since the repo rate continues to be expansive. He asked the Board of Directors of Banco de la República to resume the gradualness in the withdrawal cycle of the monetary increase and make small increases between now and the end of 2022, when the repo rate should be at a maximum of 3.25%. Gómez’s statements were given within the framework of the second day of the Banking Convention, an event organized by the Banking Association and Financial Institutions (Asobancaria).