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Roberto Steiner - Colombia under the new global economic conditions O Instituto Brasileiro de Economia (IBRE), da Fundação Getulio Vargas (FGV), realizou, no dia 19 de setembro de 2014, o seminário internacional A América Latina e as Novas Condições Econômicas Mundiais. O evento abordou a questão das perspectivas latinoamericanas diante das mudanças impostas, entre outros fatores, pela desaceleração da China e pela gradual normalização da política monetária dos EUA. O encontro foi organizado em três painéis, que incluiram desde estudos de casos nacionais — Argentina, Brasil, Chile, Colômbia e México — a apresentações mais abrangentes da economia da região como um todo ou parte dela. Confira as fotos do evento e mais informações no site do FGV/IBRE: http://bit.ly/YdyhyL
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América Latina
Colombia under the new global economic conditionsRoberto Steiner | 2014
A AMÉRICA LATINAE AS NOVAS CONDIÇÕESECONÔMICAS MUNDIAIS
seminário
Roberto Steiner Fedesarrollo Rio de Janeiro September 19, 2014
Colombia under the new global economic conditions
Colombia: For now, not much has changed
o Stability in the prices of its most relevant commodities: The price of oil has been stable; the price of coffee has gone up
o Favorable financial conditions: Capital inflows have remained buoyant and a strong peso continues to be a matter of concern o Inflation remains on target, growth is robust and
unemployment, though high, has declined continuously since December 2012
o Of concern, a weakening fiscal and current account outlook in the context of tightening financial conditions
o Stability in the prices of the most relevant commodities: The price of oil has been stable; the price of coffee has gone up
o Favorable financial conditions: Capital inflows have remained strong and a strong peso continues to be a matter of concern o Inflation continues to be on target, growth remains
robust and unemployment, though high, has declined continuously since December 2012
o Of concern, a weakening fiscal and current account outlook
In a context of declining commodities prices…
Source: World Bank, Valores Bancolombia.
80
120
160
200
240
ago-1
1
feb-1
2
ago-1
2
feb-1
3
ago-1
3
feb-1
4
In
de
x (
Ja
n 2
, 2
00
8=
10
0)
Gold
0
40
80
120
160
200
240
280
320
360
ago-1
1
feb-1
2
ago-1
2
feb-1
3
ago-1
3
feb-1
4
ago-1
4
Ind
ex
(Ja
n 2
, 2
00
8=
10
0)
Iron ore
40
50
60
70
80
90
100
110
120
130
ago-1
1
nov-1
1
feb-1
2
may-1
2
ago-1
2
nov-1
2
feb-1
3
may-1
3
ago-1
3
nov-1
3
feb-1
4
may-1
4
ago-1
4
Ind
ex
(Ja
n 2
01
1 =
10
0)
Soybeans
60
80
100
120
140
160
sep-1
1
dic
-11
mar-
12
jun-1
2
sep-1
2
dic
-12
mar-
13
jun-1
3
sep-1
3
dic
-13
mar-
14
jun-1
4
sep-1
4
Ind
ex
(J
an
2,
20
08
=1
00
)
Copper
…the most relevant for Colombia are doing OK
20
40
60
80
100
120
140
sep-1
1
ene-1
2
may-1
2
sep-1
2
ene-1
3
may-1
3
sep-1
3
ene-1
4
may-1
4
sep-1
4
Brent Oil
In
de
x (
Ja
n 2
, 2
00
8=
10
0)
0
50
100
150
200
250
sep-1
1
ene-1
2
may-1
2
sep-1
2
ene-1
3
may-1
3
sep-1
3
ene-1
4
may-1
4
sep-1
4
Ind
ex
(Ja
n 2
, 2
00
8=
10
0)
Coffee
Source: Valores Bancolombia – Federación Nacional de Cafeteros.
o Stability in the prices of its most relevant commodities: The price of oil and coal has been quite stable and the price of coffee has one up
o Favorable financial conditions: Capital inflows have remained buoyant and a strong peso continues to be a matter of concern o Inflation continues to be on target, growth remains
robust and unemployment, though high, has declined continuously since December 2012
o Of concern, a weakening fiscal and current account outlook
FDI remains very strong
16.772
10.573
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.0002000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
Left axis, USDMM % GDP
* Data until August 2014. Source: Balanza cambiaria – Banco de la República.
Portfolio capital inflows, higher than ever
Monthly averages of Foreign Portfolio Investment
Period USD Millions
2007-2010 49
2011 219
2012 273
2013 391
2014 (Jan-Aug) 1.216
117
535
1.999
914 1.020
1.680
2.273
1.194
(500)
0
500
1.000
1.500
2.000
2.500
ene-1
4
feb-1
4
mar-
14
abr-
14
may-1
4
jun-1
4
jul-14
ago-1
4
Foreign Portfolio Investment 2014
US
D M
illi
on
s
Note: Data for the latest month are preliminary (to August 29). Source: Balanza cambiaria – Banco de la República.
Main reasons for robust K inflows:
1) A tax benefit in the 2012 tax reform and simplifications in the taxation of foreign investors
• Tax reform (Law 1607, 2012): Reduction of the tax on foreign portfolio investments from 33% to 14% --or 25% if coming from tax havens
• Decree 2218 of October 2013 simplified the withholding tax, to be made only when investors receive coupon payments or sell the financial instrument --before, there were monthly withholdings
2) The rebalancing of the JP Morgan Index
• Increased weight of Colombian local public debt:
The GBI-EM Global Diversified (from 3.2% to 8%), the GBI-EM Global (1.81 % to 5.6%) and the Global Diversified Index 15% (from 3.07% to 8.26%). The latter is the most important reference; 90% of the amount indexed to JP Morgan indexes belong to this specific reference.
• The transition to the new weights is gradual, between May and September
• An initial estimate is that around USD 196 billion were indexed to the GBI-EM Global Diversified; this could imply additional K inflows to Colombia of around USD 9 billion
Increased (observed & expected) K inflows have led to a strong appreciation of the peso, only partially
reversed in the past two months
Source: Banco de la República.
1.750
1.800
1.850
1.900
1.950
2.000
2.050
2.100
0
10
20
30
40
50
60
28-f
eb-1
314-m
ar-
13
28-m
ar-
13
11-a
br-
13
25-a
br-
13
09-m
ay-1
323-m
ay-1
306-j
un-1
320-j
un-1
304-j
ul-13
18-j
ul-13
01-a
go-1
315-a
go-1
329-a
go-1
312-s
ep-1
326-s
ep-1
310-o
ct-1
324-o
ct-1
307-n
ov-1
321-n
ov-1
305-d
ic-1
319-d
ic-1
302-e
ne-1
416-e
ne-1
430-e
ne-1
413-f
eb-1
427-f
eb-1
413-m
ar-
14
27-m
ar-
14
10-a
br-
14
24-a
br-
14
08-m
ay-1
422-m
ay-1
405-j
un-1
419-j
un-1
403-j
ul-14
17-j
ul-14
31-j
ul-14
14-a
go-1
428-a
go-1
4
$/U
SD
US
D M
illi
on
s
Dialy Exchange Intervention Representative Market Rate (Right Axis)
o Stability in the prices of its most relevant commodities: The price of oil and coal has been quite stable and the price of coffee has one up
o Favorable financial conditions: Capital inflows have remained strong and a strong peso continues to be a matter of concern o Inflation remains on target, growth is robust and
unemployment, though high, has declined continuously since December 2012
o Of concern, a weakening fiscal and current account outlook
Source: Banco de la República.
Inflation has accelerated slightly but remains near the mid-point of the target range
0
1
2
3
4
5
6
7
8
may-0
9
jul-09
sep-0
9
nov-0
9
ene-1
0
mar-
10
may-1
0
jul-10
sep-1
0
nov-1
0
ene-1
1
mar-
11
may-1
1
jul-11
sep-1
1
nov-1
1
ene-1
2
mar-
12
may-1
2
jul-12
sep-1
2
nov-1
2
ene-1
3
mar-
13
may-1
3
jul-13
sep-1
3
nov-1
3
ene-1
4
mar-
14
may-1
4
jul-14
sep-1
4
%
Annual Inflation Core Inflation One year expectations
Growth has been strong (close to 5.8% on average since mid-2013)
Source: FMI-WEO actualización Julio de 2014. Official statistics of the Central Banks and Statistical Institutes of each country.
Country
Annual Growth, %
2013-I 2013-IV 2014- I 2014-II
Colombia 2,9 5,3 6,5 4,3
Brasil 1,9 2,2 1,9 1,4
México 0,6 0,7 1,8 1,6
Perú 4,6 6,9 5,1 1,7
Venezuela 0,8 1 -4,5 -4,0
Chile 4,9 2,7 2,4 1,9
Ecuador 3,6 5,2 4,9 _
6,5
4,3
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
mar-
10
jun-1
0
sep-1
0
dic
-10
mar-
11
jun-1
1
sep-1
1
dic
-11
mar-
12
jun-1
2
sep-1
2
dic
-12
mar-
13
jun-1
3
sep-1
3
dic
-13
mar-
14
jun-1
4
%
Colombia: Annual GDP Growth
Growth and a reduction in non-wage labor costs have led to a decline in unemployment & labor informality
Source: DANE.
12,6 12,7
11,5
10,9
9,9
9,3
6
7
8
9
10
11
12
13
14
15
jul-09
nov-0
9
mar-
10
jul-10
nov-1
0
mar-
11
jul-11
nov-1
1
mar-
12
jul-12
nov-1
2
mar-
13
jul-13
nov-1
3
mar-
14
jul-14
%
Unemployment Rate
52,6
51,9
51,4 51,8
49,2
48,1
46
48
50
52
54
jun-0
9
oct
-09
feb-1
0
jun-1
0
oct
-10
feb-1
1
jun-1
1
oct
-11
feb-1
2
jun-1
2
oct
-12
feb-1
3
jun-1
3
oct
-13
feb-1
4
jun-1
4
Proportion of the population in informal employment
(13 cities, moving quarters)
%
Tax Reform
Together with robust economic activity, the rise in inflation has brought about a 125 bp increase in the central bank policy rate
of interest since May
3,25
4,5
0,0
2,0
4,0
6,0
8,0
10,0
12,0
sep-0
8
ene-0
9
may-0
9
sep-0
9
ene-1
0
may-1
0
sep-1
0
ene-1
1
may-1
1
sep-1
1
ene-1
2
may-1
2
sep-1
2
ene-1
3
may-1
3
sep-1
3
ene-1
4
may-1
4
sep-1
4
%
Source: Banco de la República.
o Stability in the prices of its most relevant commodities: The price of oil and coal has been quite stable and the price of coffee has one up
o Favorable financial conditions: Capital inflows have remained strong and a strong peso continues to be a matter of concern o Inflation continues to be on target, growth remains
robust and unemployment, though high, has declined continuously since December 2012
o Of concern, a weakening fiscal and current account outlook in the context of tightening financial conditions
Foreign Trade Dynamics
13,2
15,6
6,2
4,5
0
2
4
6
8
10
12
14
16
18
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
% G
DP
Export growth
Total Non Traditionals
11,4
15,0
0
2
4
6
8
10
12
14
16
18
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
% G
DP
Import growth
Source: Banco de la República.
Nominal and real exchange rate
1550
1600
1650
1700
1750
1800
1850
1900
1950
2000
2050
2100
28-m
ar-
13
28-j
un-1
3
28-s
ep-1
3
28-d
ic-1
3
28-m
ar-
14
28-j
un-1
4
US
D M
illi
on
s
Nominal Exchange Rate
70
75
80
85
feb-1
3
abr-
13
jun-1
3
ago-1
3
oct
-13
dic
-13
feb-1
4
abr-
14
jun-1
4
ago-1
4
Ind
ex
(Ja
n 1
99
4=
10
0)
Real Exchange Rate
Source: Banco de la República.
Trade Balance and Current Account Deficit (% of GDP)
2,2
0,3
0,1 0,1
1,0 0,9
-0,1
-0,4
0,2
0,7
0,5
1,6
1,1
0,6
-1,0
-0,5
0,0
0,5
1,0
1,5
2,0
2,5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
% G
DP
Trade Balance
*Fedesarrollo forecast. Source: Banco de la República.
4,7
3,7
-1,5
-0,5
0,5
1,5
2,5
3,5
4,5
5,5
6,5
7,5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014*
% o
f G
DP
Current Account - FDI
FDI Current Account Deficit
The fiscal deficit has stabilized
-3,9
-2,8
-2,3 -2,4 -2,4
-1,1
-0,1
0,2
0,0
-4,5
-4,0
-3,5
-3,0
-2,5
-2,0
-1,5
-1,0
-0,5
0,0
0,5
2010 2011 2012 2013 2014
% G
DP
Central Government
Total Fiscal Balance Primary Fiscal Balance
Source: Ministry of Finance.
The Medium Term Fiscal Framework acknowledges a decline in the oil sector´s contribution to the budget
Source: Ministerio de Hacienda.
2,5
1,8 2,0 2,0 2,0
1,8
1,7
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2014 2015 2016 2017 2018 2019 2020
% G
DP
Oil Revenues
And there are additional expenditure needs, as recently recognized by the government
Yearly expenditure above what is in the latest Medium Term Fiscal Framework:
1. Agricultural and Rural Development: Could be 1% of GDP higher if a peace agreement is finalized
2. Health: Conservative estimates call for additional expenditure of 0.8% of GDP
3. Quality of education: A study by “Fundación Compartir” suggests additional expenditures of 0.3% of GDP
4. Early Childhood: A “Fundación Éxito” report estimates additional expenditure of 0.4% of GDP
5. Pensions: Fedesarrollo estimates additional outlays of 0.3% of GDP
-2,4 -2,4 -2,3 -2,2 -2,1 -2,0 -1,9 -1,6 -1,4 -1,2 -1,0 -0,8
-3
-2,5
-2
-1,5
-1
-0,5
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023%
of
GD
P
Structural Balance of CG
There is a strong commitment to fiscal discipline (FISCAL RULE)
Structural Deficit Targets 2014: 2,3% of GDP 2018: 1,9% of GDP 2022: 1,0% of GDP
Source: Ministry of Finance.
“Article 5° Fiscal Rule. (…) the National Government will enforce an annual decreasing path for the Structural fiscal balance” Law 1473 of 2011.
In short, the fiscal outlook raises important concerns
• Overall, expenditure needs may be 2% of GDP higher than what is in the MFMP
• Political economy considerations point towards the increase in several business-unfriendly taxes (corporate income tax, wealth tax, FTT)
• At this stage, FEDESARROLLO forecasts growth at 4.1-4.7% in 2014 and at 4.1-5.9% in 2015