Balance of economic activity in May reaffirms the sectoral gap in Colombia

The good pace shown by the country’s economy in April seems to have been a one-hit wonder, or at least that is what is shown by the new report of the Economic Monitoring Indicator for May, revealed by the Dane yesterday and in which it can be seen how several key sectors such as commerce and industry fell. while the dependence on the public sector and agriculture is maintained, once again.

According to the data provided on this occasion, the annual variation of the ISE was 2.4%with which the country achieves a significant rebound compared to the -0.1% of the same period in 2023 and becomes the second highest figure so far this year, surpassed only by the 5.6% obtained in April.

With this general data, for Diego Montañez-Herrera, consultant of the Inter-American Development Bank, there is a first relevant data to analyze and that is that the Colombian economy has barely grown 1.99% so far this year (January – May period) according to the accounts presented by the Dane.

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“The Dane Economic Monitoring Indicator provides a measure of the evolution of Colombia’s economic activity and on this occasion tells us that in May it grew by 2.45%, which if compared throughout the year, is barely close to 2%,” said this expert.

It should also be noted here that for the fifth month of 2024 (preliminary data), the Economic Monitoring Index in its series adjusted for seasonal and calendar effects stood at 122.64, which represented a growth of 2.52% compared to the month of May 2023, when it stood at 119.62; as can be seen in this report.

Zooming in on ISE data for each sector measured in this reportIn its annual series, primary activities led by agriculture continue to be one of the greatest drivers of the economy after reaching a variation of 4.6%, which greatly exceeds the 1.7% of a year ago, although it falls short of the 10.3% of April and remains with the second lowest record of 2024.

In this case, José Manuel Restrepo, former Minister of Finance and rector of the EIA University, points out that although the figures confirm a slight recovery, they are lower than last month, which shows that an urgent economic reactivation plan is needed and that the economy is once again losing strength in its dynamics month by month.

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“The results of industry and construction are still quite negative (14 months in the red) and these are key to generating employment. We could be closing the year with something close to 2% growth, which is still far from what is necessary. “so that employment and the economy’s potential in general do not deteriorate,” said this expert.

For Restrepo Abondano, the May ISE is conclusive proof that the country is experiencing divergent growth, which is generating a high dependence on sectors such as public administration, agriculture and energy, while industry, commerce, the financial sector, ICT and construction have fallen again.

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Turning the page, it must also be said that the second growth The highest growth rate by activity was in the tertiary sectors, which ended with an annual variation of 3.1%, which also shows a notable growth compared to the data from 12 months ago (-0.1%), but if compared with the April figures, it falls short of the 5.2% that existed at that time.

Bruce Mac Master, president of Andi, put another look at this reality in the panorama and pointed out that it is competitiveness that is being compromised and with this, the capacity for Colombia to become an attractive destination. for investment or the implementation of initiatives that will help slow the slowdown.

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“There is no doubt that the current situation is not only preventing us from increasing our competitiveness and diversifying Colombia’s export portfolio, but is also causing a significant reduction in the country’s ability to strengthen its industry,” said the union spokesman.

It should be noted here that the results in tertiary activities were mixed when broken down by sectors, since even though they ended in positive territory, there were declines in sectors such as trade (-0.2%), information and communications (-0.8%) and professional and scientific activities (-0.2%).

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In the list of tertiary activities, it should also be noted that public administration and defense continue to be the stars in this activity after growing by 9% and marking a distance from the 2% of May 2023. However, if we take into account that in April it reached 13.5%; there is evidence that little by little the momentum that it had in the reports is being lost.

One last piece of data to take into account in the figures released by the DANE on the state of the economy in Colombia has to do with the manufacturing and construction industries (secondary activities), which returned to negative territory in May, after the slight respite they obtained the previous month and returned to the path of red data that they had been following for more than a year.

Economic activity in the country grew again in May, although with less force

Thus, Andi made it clear that it is necessary to invest in the industry and construction, since “reactivation can only occur if we have these sectors actively participating in the country’s dynamics, which also requires, of course, the confidence of business owners, the confidence of investors, the confidence of consumers, the confidence of merchants who have had particularly bad indicators.”

Meanwhile, for the president of the Colombian-American Chamber, AmCham Colombia, María Claudia Lacouture, “these results reflect a significant challenge for the Colombian economy. Although we have experienced growth, it remains limited and requires strategic measures to boost both supply and demand. It is crucial to work together with the private sector to regain confidence and promote investment.”

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This expert indicated that the execution of the investment budget must also be improved, which is currently only 22% compared to the average of 27.4% of the last five years and stressed that the recent initiative of a reactivation plan is a good start, but that greater clarity is needed in financing and the implementation details to ensure its success in the short term.