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Economy

Colombian economy experiences slight contraction in April

by David Spencer Seconi June 20, 2012

colombia-economy

According to a survey of Colombian businesses released Wednesday, the business sector saw a slight downturn in April as the global market continues to struggle.

The Coordinated Survey of Industrial Opinion, released by The National Association of Colombian Businesses, revealed a healthy overall trimester: according to the survey, for the year through April 2012 industrial production grew 2.3%, total sales 4.3% and international sales 2.7%.

According to statistics provided by other countries, Colombia’s growth in 2012 was relatively high both for the region and the world, surpassing Turkey, Greece, Peru, and Brazil, among many others.

Despite Colombia’s continued growth, April numbers revealed a slowdown in manufacturing levels that has some businesses worried. Industrial capacity levels for April were 74.6%, two percentage points below the historic average of 76.4%.

Moreover, inventory levels for April 2012 were lower than April 2011, dropping from 21.2% to 14.5%, another indication of decreased output as manufacturers continue to sell preexisting stock while producing less.

The international economic situation, combined with internal difficulties in Colombia, might be having its first effects on the Andean country. According to business leaders, the following domestic issues presented the largest obstacles to development, respectively: the cost of primary materials, the exchange rate, lowered demand, higher competition, infrastructure and logistical costs, contraband, low turnover in accounts receivable and the lack of work capital.

In response to the downtown, leaders called on the government to maintain a favorable climate to business and investment, such as maintaining low interest rates.

Those surveyed were also asked to discuss their opinions regarding the recent free trade agreement (FTA) signed with the United States. On average, those interviewed believed that the FTA would increase trade with the United States by 12% in 2012, 16.3% in 2013 and 26.4% within the next five years.

They looked toward the larger states such as Florida (67.3%), California (42.9%), New York (42.9%) and Texas (24.5%) as the areas with the most potential for increased trade.

The reciprocity of investment opportunity between the two countries was questioned: only 37% believed the treaty would create opportunities within the United States, whereas 68% believed it would open up Colombia to American investment.

Those interviewed were also asked to explain what factors could limit the success of the FTA. In regard to the situation in the United States, the largest percentage of those interviewed responded that the difference in the norms and regulations between the two nations would create the most difficulties. When asked to explain the largest limiting factor in Colombia, a majority (71.7%) stated a lack in investment in infrastructure.

andieconomyEOICFTAGDPindustrymanufacturingUnited States

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