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An Outlook of the Colombian Economy
Ministry of Finance and Public CreditJuly 2014
6.4
3.1
-6
-4
-2
0
2
4
6
8
10
I II III IV I II III IV I II III IV I II III IV I II III IV I II III I
2008 2009 2010 2011 2012 2013 2014
Colombia Rest of PA (PA Average without Colombia)
PIPE
Quarterly GDP (Annual % variation)
Strong recovery
Source: DANE
Economic Growth
During 1Q2014, Colombia had the highest growth
rate of the region…
Source: Statistics Institutes
6.4
4.8
2.6
1.9 1.8
1
3
5
7
Colombia Peru Chile Brazil Mexico
Economic Growth
1Q 2014 GDP Growth (Annual % variation)
… and the second highest in the world
Source: The Economist.*4Q2013.
7.7
6.46.0
5.44.8 4.8
4.2 4.1 4.0
2.8 2.6 2.5 2.2 2.1 2.0 1.9 1.9 1.8 1.8 1.7 1.7 1.6 1.5 1.4 1.4 1.10.7 0.7 0.6 0.5 0.2 0.2
-0.3-0.4-0.6-0.8-0.9-1.7-2.0-2.3
-2.7-2.8
-5.3
-8
-6
-4
-2
0
2
4
6
8
10
Chi
na
Col
ombi
a
Indo
nesi
a
Tha
iland
Per
u
Indi
a
Pak
ista
n*
Mal
asia
Sau
di A
rabi
a*
Hon
g K
ong
Chi
le
Aus
tral
ia
Egy
pt
Arg
entin
a*
Isra
el
Bra
zil
Sou
th A
fric
a
Uni
ted
Sta
tes
Mex
ico
Tai
wan
Sw
eden
Rus
sia
Sou
th K
orea
Tur
key
Can
ada
Sw
itzer
land
Aus
tria
*
Ven
ezue
la
Uni
ted
Kin
gdom
Pol
and
Sin
gapo
re
Japa
n
Ger
man
y
Fra
nce
Bel
gium
Den
mar
k
Hun
gary
Net
herla
nds
Spa
in
Italy
Nor
way
Cze
ch R
epub
lic
Gre
ece
Economic Growth
1Q 2014 GDP Growth – The Economist Sample (Annual % variation)
The agricultural and manufacturing sectors have shown an
important recovery
6.1
3.3
-8
-6
-4
-2
0
2
4
6
8
10
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDP Agro GDP Manufacturing
PIPE
Economic Growth
Quarterly GDP (Annual % variation)
Source: DANE
Private consumption
The improvement in consumer confidence was
reflected in the behavior of private consumption
5.1
0.0
2.0
4.0
6.0
8.0
10.0
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I
2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: DANE. DGPM-MHCP calculations.
Household consumption (Annual % variation)
Investment rate
Colombia keeps breaking its records for the
Investment Rate
23.2
14.2
18.8
23.924.5
27.4 27.5 27.6
30.4
12
15
18
21
24
27
30
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014-I
Investment Rate (% of GDP)
Source: DANE
31.2%30.4% 30.0%
24.2% 24.2% 24.1%
20.9% 20.7% 20.3%19.1%
12%
16%
20%
24%
28%
32%
India Colombia Perú Chile Turquía Indonesia Argentina Sur Africa México Brasil
Investment Rate 1Q2014 (% of GDP)
This high investment rate has contributed to
sustainable economic growth rates
5 Frágiles
Pacific Alliance
n
Investment rate
Source: Statistics Institutes
The dynamism of the economy has resulted in a
reduction in the unemployment rate
Unemployment rate
Unemployment Rate (National, Monthly)
Source: DANE
11.1%
10.7%9.7%
9.0%8.8%
7%
9%
11%
13%
15%
17%
Jan
Feb
Mar
Apr
May Jun
Jul
Aug
Sep Oct
Nov
Dec
max-min 2001-2009 2010 2011 2012 2013 2014
The reduction of the unemployment rate has been paired with an increase in formal employment
Formal Employment
Unemployment Rate vs. Formality Rate* (%)
Tax Reform
Source: DANE *Formal Employees/Total Employees
12.2
8.8
44.8
47.1
41
42
43
44
45
46
47
48
7
8
9
10
11
12
13
14
15
16
Jan
-07
May
-07
Sep
-07
Jan
-08
May
-08
Sep
-08
Jan
-09
May
-09
Sep
-09
Jan
-10
May
-10
Sep
-10
Jan
-11
May
-11
Sep
-11
Jan
-12
May
-12
Sep
-12
Jan
-13
May
-13
Sep
-13
Jan
-14
May
-14
Unemployment rate (National, monthly) Formality rate (13 areas, quarterly moving average, right axis)
Since the 2012 Tax Reform, formal employment has increased by 1’023,000 jobs*
Source: DANE. * (Quarterly Moving Average (QMA) Feb-Apr 14 vs. QMA Oct-Dec 12). **Social Security Affiliation
Number of formal jobs created since the Tax Reform – National(Quarterly moving average, thousands)
Formal Employment
-108 -83
42
314
450538 552
606650 660
602533
459
575
713
922
1,023
(200)
-
200
400
600
800
1,000
1,200
Cen
tral
Ban
k’s
Targ
et
Inflation
Inflation continues to stand within the Central Bank’s
target
2.79%
1%
2%
3%
4%
5%
6%
7%
8%
9%
Jun-
02
Jun-
03
Jun-
04
Jun-
05
Jun-
06
Jun-
07
Jun-
08
Jun-
09
Jun-
10
Jun-
11
Jun-
12
Jun-
13
Jun-
14
Source: DANE
Reduction of the Fiscal Deficit
Consolidated Public Sector Balance (% of GDP)
26.128.329.2 29.2
-3.1-0.9
-5
1
7
13
19
25
31
2010 2013
Revenue Expenditure Fiscal Balance
Fast consolidation of the fiscal balance
Source: Ministry of Finance
Colombia has a sustainable fiscal deficit
Source: World Economic Outlook & Ministry of Finance.
Reduction of the Fiscal Deficit
5 Frágiles
Pacific Alliance
Consolidated Public Sector Balance - 2013 (% of GDP)
-0.8
0.7 0.9
2.2 2.3 2.33.0
3.5
4.9
8.5
-1.0
1.0
3.0
5.0
7.0
9.0
Peru Chile Colombia Indonesia Turkey Mexico Brazil Argentina SouthAfrica
India
Borrowing Costs
10 year USD rate (%)
3,63%2%
4%
6%
8%
10%
12%
14%
May
-02
May
-03
May
-04
May
-05
May
-06
May
-07
May
-08
May
-09
May
-10
May
-11
May
-12
May
-13
May
-14
Borrowing costs are the lowest in the last ten years
6.30%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
May
-04
May
-05
May
-06
May
-07
May
-08
May
-09
May
-10
May
-11
May
-12
May
-13
May
-14
10 year COP rate (%)
Source: Ministry of Finance
Source: Asobancaria- CIFIN
PIPE had a considerable impact on mortgage
interest rates
Reduction in interest rates
PIPE
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
Ma
r-1
0
Ma
y-1
0
Ju
l-1
0
Se
p-1
0
No
v-1
0
Ja
n-1
1
Ma
r-1
1
Ma
y-1
1
Ju
l-1
1
Se
p-1
1
No
v-1
1
Ja
n-1
2
Ma
r-1
2
Ma
y-1
2
Ju
l-1
2
Se
p-1
2
No
v-1
2
Ja
n-1
3
Ma
r-1
3
Ma
y-1
3
Jul-13
Se
p-1
3
No
v-1
3
Ja
n-1
4
Ma
r-1
4
VIS
No VIS
PIPE Rate
Mortgage interest rates (%)
Social Housing
Non-social Housing
4.5
3.7 3.63.3 3.2 3.1 3.0 2.9 2.8 2.8 2.7 2.6
2.4 2.3 2.3 2.3 2.1 2.1 2.0 1.9 1.8 1.7 1.7 1.71.5 1.4 1.2 1.2 1.0
0.9 0.80.6 0.6
0.4 0.3
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Col
ombi
a
Kor
ea
Chi
le
New
Zea
land
Isra
el
Pol
and
Mex
ico
Uni
ted
Kin
gdom
Sw
eden
Uni
ted
Sta
tes
Icel
and
Aus
tral
ia
Est
onia
Can
ada
Slo
vak
Rep
ublic
Tur
key
Sw
itzer
land
Luxe
mbo
urg
Hun
gary
Cze
ch R
epub
lic
Nor
way
Ger
man
y
Irel
and
Aus
tria
Den
mar
k
Japa
n
Bel
gium
Por
tuga
l
Fra
nce
Spa
in
Net
herla
nds
Italy
Gre
ece
Fin
land
Slo
veni
a
Growth forecast for 2014 according to the IMF (Annual % variation)
Colombia is the leader in growth perspectives for 2014
among the countries of the OECD
Growth perspectives
Source: IMF
7.3
6.05.4 5.45.1
4.64.2 4.0 3.7 3.4 3.3 3.2 3.2 3.0 3.0 2.9 2.7 2.6 2.5 2.5 2.4 2.3 2.3 2.3 2.3 2.2 2.0 1.8 1.8 1.8
1.2 1.2 1.2 1.2 1.2 1.0 0.9 0.90.5 0.5
0.0
-1.0-1.8
-8
-6
-4
-2
0
2
4
6
8
Chi
na
Indi
a
Indo
nesi
a
Pak
ista
n
Mal
aysi
a
Col
ombi
a
Sin
gapo
re
Sau
di A
rabi
a
Chi
le
Isra
el
S. K
orea
Pol
and
HK
Mex
ico
Tai
wan UK
Aus
tral
ia
US
A
Hun
gary
Tai
land
Nor
way
Tur
key
Sou
th A
fric
a
Can
ada
Sw
eden
Cze
ch R
ep.
Sw
itzer
land
Bra
zil
Ger
man
y
Egy
pt
Japa
n
Eur
o Z
one
Aus
tria
Bel
gium
Den
mar
k
Net
herla
nds
Fra
nce
Spa
in
Italy
Rus
sia
Gre
ece
Arg
entin
a
Ven
ezue
la
Colombia is sixth economy with best growth perspectives for
2014 according to The Economist
Growth perspectives
Source: The Economist
Growth forecast for 2014 according to The Economist (Annual % variation)
6,309
8,288
11.251
20.104
4,000
8,000
12,000
16,000
20,000
2010 2014 2018 2026
With Peace and 4G, Income per capita will reach a level
of USD 20.000 in 12 years, equivalent to Portugal’s
Increase in per capita GDP
GDP per capita (Current USD)
1% PEACE1% 4G
1% PEACE
1% 4GChile: USD 14.800
10.236
15.720
Source: Ministry of Finance
An Outlook of the Colombian Economy
Ministry of Finance and Public CreditJuly 2014