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COLOMBIA.

COLOMBIA

 % Change (In millions US $)
 Interest
Date CPI M1 Rate(%) Imports Exports Trade Bal

 1990 32.4 27.9 31.0 3,754.0 4,620.0 866.0
 1991 26.8 34.1 29.7 4,428.0 5,488.0 1,060.0
 1992 25.1 41.8 27.0 5,718.0 4,941.0 -777.0
 1993 22.6 25.0 26.7 6,816.0 4,163.0 -2,653.0
 1994 22.6 26.7 37.4 11,474.0 9,290.0 -2,184.0
 1995 19.5 19.7 32.4 11,330.0 8,997.0 -2,333.0
 1996 21.6 16.2 27.5 12,787.0 10,574.0 -2,213.0
 1997 17.7 23.6 23.8 14,041.0 11,648.0 -2,393.0
 1998 16.7 -12.4 34.0 12,933.0 8,744.0 -4,219.0
 1999 9.2 19.9 15.4 10,658.0 11,575.0 916.0
Jan 1.3 -9.9 10.6 779.0 712.0 -67.0
Feb 2.3 -10.2 10.4 1,613.0 1,475.0 -138.0
Mar 0.9 -7.7 23.7 2,506.0 2,421.0 -85.0
Apr 0.8 -18.9 20.2 3,384.0 3,253.0 -131.0
May 0.5 1.3 18.5 4,170.0 4,179.0 9.0
Jun 0.3 4.0 19.1 5,063.0 5,218.0 155.0
Jul 0.3 4.2 20.2 5,975.0 6,237.0 262.0
Aug 0.5 6.8 20.1 6,763.0 7,237.0 474.0
Sep 0.5 8.3 18.3 7,657.0 8,298.0 641.0
Oct 0.5 0.5 18.2 8,582.0 9,263.0 681.0
Nov 0.5 2.7 17.1 9,628.0 10,332.0 704.0
Dec 0.5 19.9 15.4 10,658.0 11,575.0 916.0
 2000 8.8 10.0 13.3 11,538.0 13,043.0 1,505.0
Jan 1.3 -9.9 10.6 544.0 1,014.0 470.0
Feb 2.3 -10.2 10.4 1,710.0 2,074.0 364.0
Mar 1.7 -11.4 11.3 2,789.0 3,136.0 347.0
Apr 1.0 -7.1 11.6 3,657.0 4,033.0 376.0
May 0.5 -3.2 12.0 4,707.0 5,755.0 1,048.0
Jun 0.2 14.7 12.0 5,675.0 6,306.0 631.0
Jul 0.3 34.8 12.3 6,542.0 7,423.0 881.0
Aug 0.3 14.6 12.9 7,567.0 8,618.0 1,051.0
Sep 0.4 -19.2 13.0 8,556.0 9,717.0 1,161.0
Oct 0.1 -18.0 13.3 9,517.0 10,925.0 1,408.0
Nov 0.3 -9.3 13.2 10,544.0 11,911.0 1,367.0
Dec 0.5 10.0 13.3 11,538.0 13,043.0 1,505.0

 2001 9.0 12.0 14.0 14,000.0 13,200.0 -800.0
Jan 1 19.6 13.5 960.0 1,017.0 57.0
Feb 1.9 15.2 13.3 2,053.0 1,978.0 -75.0
Mar 1.5 17.5 13 3,175.0 2,978.0 -197.0
Apr 1.2 15.5 12.7 4,331.0 4,031.0 -300.0
May 0.4 10.1 12.7 5,121.0
Jun 0 10.2 12.8
Column
Number 1 2 3 4 5 6

 (In millions US $)

 Current Net Exchange
Date Acct Bal Reserves Rate

 1990 510.0 4,501.0 568.73
 1991 2,339.0 6,420.0 706.86
 1992 678.0 7,767.0 811.77
 1993 -905.0 7,869.0 917.33
 1994 -2,800.0 8,049.0 831.27
 1995 -2,300.0 8,323.0 987.22
 1996 -3,956.0 9,897.0 980.00
 1997 -4,715.0 9,881.0 1,293.58
 1998 -5,800.0 8,694.0 1,528.25
 1999 -2,062.0 8,144.0 1,895.97
Jan -- 8,153.0 1,949.54
Feb -- 8,216.0 1,948.05
Mar -- 8,768.0 1,955.14
Apr -- 8,751.0 1,603.87
May -- 8,758.0 1,672.01
Jun -- 8,500.0 1,741.00
Jul -- 8,328.0 1,800.79
Aug -- 8,327.0 1,969.82
Sep -- 7,881.0 2,003.82
Oct -- 7,907.0 1,966.50
Nov -- 7,883.0 1,922.47
Dec -2,062.0 8,144.0 1,895.97
 2000 -1,965.0 8,832.0 2,196.76
Jan -- 8,153.0 1,949.54
Feb -- 8,216.0 1,948.05
Mar -- 8,209.0 1,955.14
Apr -- 8,333.0 1,988.65
May -- 8,351.0 2,084.92
Jun -936.0 8,367.0 2,136.22
Jul -- 8,598.0 2,175.02
Aug -- 8,484.0 2,204.22
Sep 1,532.0 8,611.0 2,216.93
Oct -1,735.0 8,730.0 2,147.89
Nov -1,869.0 8,164.0 2,169.82
Dec -1,965.0 8,832.0 2,196.76

 2001 -2,500.0 9,145.0 2,400.00
Jan 8,936 2,240.80
Feb 9,075 2,257.45
Mar -736 9,105 2,309.83
Apr 9,146 2,346.73
May 9,225 2,327.25
Jun 9,003 2,305.33
Column
Number 7 8 9

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections. 1-2:
Annual figures represent January-December increase. As of July 2001,
monthly M1 figures represent monthly year-on-year change. 3: Through
April 2001: Rate on 90-day ODs. Annual figures represent average
for year. As of July 2001, interest rate shown is the
benchmark DTF rate, calculated weekly as an average of the financial
sector's available 90-day deposit rates. 4-6: Trade figures
show imports and exports on a balance of payments basis and are
accumulated monthly. As of July 2001, trade figures are FOB. 7:
Through April 2001, current account figures were
accumulated monthly. As of July 2001, the figures are quarterly
published figures from the Central Bank. 4-9:
Annual figures represent values at year-end.

SOURCES BY COLUMN: 1: DANE. 2-3: Banco de la Republica. 4-5: DANE. 7-9:
Banco de la Republica.


FINANCIAL OUTLOOK

* Inflation looks likely to end the year at a figure above 8% ranging up to 9%, just above the central bank's 8% target. The consumer price index rose 6.2% in the first half of the year, though it customarily drops much lower in the second half. However, around 650,000 public sector workers have still not received all of an index-linked salary increase for this year, as mandated by a constitutional court ruling in 2000. The government wants to try to pay these increases later this year, which could put upward pressure on prices.

* Interest rates, contrary to many expectations, have remained stable and are likely to stay so for the rest 2001. They may rise slightly if weak consumer demand and industrial credit demand begin to pick up, and if the banking sector's incipient recovery pushes up willingness to lend. However, the government has eased pressure on rates by reducing its domestic financing needs for this year and instead opting to raise more on international markets. A recent domestic debt swap has further reduced financing needs for 2002, but rates may nevertheless come under pressure next year because of political uncertainty surrounding the May general elections, coupled with an anticipated upsurge in guerrilla activity coinciding with the electoral campaign.

* The trade balance, after more than two years of surpluses, is moving into deficit territory due to weaker export earnings coupled with a rise in imports. However, it is not expected to widen dramatically. Consumer demand is still lagging, and importers may have stockpiled early in the year in anticipation of a further slump in the peso. But the outlook for revenues from oil, Colombia's biggest export, is negative because of an unprecedented wave of guerrilla assaults on infrastructure. If attacks continue, the trade balance could worsen more. In any case, the problems in oil so far mean Colombia seems highly unlikely to end the year with a $1.46 billion trade surplus as estimated by the IMF. This will in turn affect the current account balance, which could worsen beyond the IMF's predicted $1.6 billion deficit.

* Reserves are under no pressure and should meet the IMF-agreed floor target of $9.145 billion by year-end.

* The peso's depreciation this year is expected to be roughly in line with inflation. The currency reappreciated slightly in the second quarter after the government met its foreign financing needs for 2001 and began pre-financing its 2002 spending. But security worries and electoral uncertainty, coupled with doubts over the government's ability to finish enacting an ambitious economic reform agenda during its last months in office, could spur increasing demand for dollars as the year closes.

ECONOMY MONITOR

* Growth Outlook: Previous official forecasts of 3.8%-4.1% growth this year will be revised, after the first quarter's disappointing 1.7% year-on-year. Most private analysts have cut annual forecasts to 2%-2.6%, in light of pessimistic data on industrial and commercial demand. Guerrilla attacks have nearly paralyzed one of the country's biggest oil fields, which will surely affect second-quarter figures and also reduce the government's income. This may spark a need for further public-sector cutbacks in order to meet fiscal adjustment goals.

* Political Factors: The risks to confidence associated with the long-running insurgent conflict will likely increase, since all rebel groups will probably try to stage shows of strength prior to the May 2002 elections. The government is also expected to step up efforts to eradicate illegal drug crops after delivery of US-provided helicopters (under Plan Colombia), starting in July. After lengthy negotiations, the FARC released several hundred captive soldiers in June, in return for a "humanitarian" release from prison of 14 guerrillas. While positive, this exchange is unlikely to lead to further advances in the peace talks. Plans to demilitarize a northern zone for talks with the ELN guerrillas have fizzled thus far, and seem unlikely to get off the ground during President Andres Pastrana's remaining time in office. Both rebel groups are likely to be more interested in awaiting the outcome of the elections. Liberal party presidential candidate Horacio Serpa remains the frontrunner, according to polls.

* Fiscal Situation: Recent data suggests the central government's fiscal deficit target of 4.1% of GDP is at risk from higher debt service costs, lower-than-expected tax revenues, and reduced oil income. Some analysts believe the government may have to ask the IMF to ease this year's agreed target of 2.8% for the combined public sector, charging that undue efforts to meet the target may have an even more harmful impact on already weak economic growth. But the government has successfully raised $2.7 billion on international capital markets, meeting its needs for this year, and has begun to issue bonds towards its 2002 foreign financing needs of $2.2 billion. A domestic debt swap, and planned foreign debt swap, are cutting debt service costs over the next three or four years.

* Major Sectors: Oil earnings have plunged because of a sustained guerrilla attack against the pipeline from the Cano Limon field (115,000 b/d). Operations stopped for almost five months, then briefly resumed in mid-July before another attack halted operations again. But government oil company Ecopetrol is bullish over future prospects after signing 54 exploration and production contracts in the past 18 months. Coffee production is down, putting output targets further out of reach and casting more gloom over the sector, already suffering from record low prices. Coal output should rise following last year's privatization of the Cerrejon Zona Norte mine, where annual output should climb from 19 million metric tons to 21 million. The Cerro Matoso ferronickel complex is ramping up nickel production and should boost output from 30,000 metric tons to 55,000 next year. Industrial production and sales rose but then slowed significantly in a further sign that recovery from the 1999 recession is far from assured, a result of continued weak demand and lack of access to capital. Prepared foods, tobacco, and drinks have been the most sluggish sectors. Construction has shown some signs of recovery, particularly in low-cost social housing. However this has been more than offset by reduced investment in public works projects.

* Other Sectors: Nontraditional exports show solid growth (up 17% in value from January-May), buoyed since 1999 by the weakening peso. Still, access to the important US market could be threatened if preferential tariffs are not extended after the Andean Trade Preference Act expires at end-2001. The financial sector's weaknesses are still manifest, especially in the mortgage sector, but the sector as a whole has returned to profit ($96 million from January-April, compared with $312 million in losses for the same period last year). Cattle ranchers celebrated the designation of a large northern zone as free of foot-and-mouth disease, paving the way for more exports.

* Employment: Authorities say industrial jobs are being created, but overall unemployment is high and rising. May urban unemployment stood at 18.1%, up year-on-year from 17.1%. Social tensions are manifest.

* Stock Market And Investment: In July Colombia's three regional stock markets merged into a unified national exchange with a new index, which should improve liquidity and transparency. Performance had been among the world's most favorable this year but shares remain deeply undervalued compared with book value, and the Bogota index ended its life around 40% below its peak. International investor interest has continued to decline. At $394 million, first-quarter foreign direct investment had not moved from 2000, according to the central bank.

COMPANY MONITOR

* Plans for a joint venture between Avianca and Aces, the country's two largest airlines, were ruled out in June by trade regulators on competition grounds. The two companies are appealing the decision

* Local brewing giant Bavaria bought back around 10% of its own shares in a May stock market offer, dismaying international investors since this reduced the free float in what had been Colombia's most liquid stock. Before the buyback Bavaria denied it was considering any merger or co-venture with a foreign rival.

* Insurance and investment group Suramericana de Inversiones, part of the Sindicato Antioqueno, said in May it was selling a 19.5% stake in its Inversura insurance arm to Munich Re, the world's biggest reinsurer.

* RCN Television concluded a five-year deal in June to sell at least 300 hours of programming annually to Univision, the dominant US Spanish-language TV network, on undisclosed terms.

* The government said in June it would auction three PCS mobile telephony licenses by year-end.
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Title Annotation:economic indicators
Publication:America's Insider
Article Type:Illustration
Geographic Code:3COLO
Date:Aug 3, 2001
Words:2540
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