Colombia’s trade surplus with the United States narrowed in May as policy-makers decide to leave interest rates unchanged for the second straight month while extending dollar purchases.
In the first four months of the year, the trade surplus with the U.S. was $1.394 billion, down from $3.551 billion in the same period in 2012. This follows revelations on the May anniversary of Colombia’s Free Trade Agreement with the U.S. that exports to the U.S. had dropped 13% while imports increased 15%.
Colombia’s main trading partner is the U.S. with 36% of total exports and 39% of total imports. China comes next with 6% of total exports and 16% of total imports.
Colombia’s central bank Friday decided to leave the interest rates – which have seen seven cuts over the past year – unchanged for the second straight month. Policy-makers hope that what is now one of the lowest Latin American interest rates, along with a government stimulus package, will reverse the slowdown in economic growth which the country has been experiencing.
Industrial output which slumped 11.5% in March compared to a year earlier, added to coffee strikes and trouble in the oil and coal sectors, has slowed the economic growth rate to become one of the lowest in the Andean region. According to the central bank the economy grew less than 3% in the first quarter of this year compared to 2012, but then accelerated in the following three months.
Bank officials said that the program of dollar purchases, which had been up to $30 million a day, would be continued and it will buy at least $2.5 billion over the next four months, compared with $3 billion over the previous period. The program is intended to weaken the peso and help local exporters.
Policy-makers would welcome a further decline in the peso which has fallen over 7% this year, having risen 10% in 2012. The peso plunged to a 16-month low in the last week of May, the low level largely fueled by concerns over the economic slowdown.
Central bank officials say that these measures should encourage growth to close to its potential by the end of 2013 as demand responds to the policy measures.
In March Colombian imports decreased 10.3% according to DANE mainly to do with a reduction in imports of manufactured products and automobiles, while in November 2012 Colombia actually swung to a trade deficit as imports climbed and exports declined. There was a massive 78.5% increase in imports of manufactured products from a year earlier. January saw another trade deficit with export figures outweighing imports. February showed a trade surplus amid shrinking imports of agricultural goods and automobiles.
U.S. commerce secretary Rebecca Blank said that 600 new Colombian companies have started exporting to the U.S. since the implementation of the FTA, which will spell good news for the export-led economy.
- Excluding oil Colombia exports to US rose 7% after FTA: Blank (Colombia Reports)
- Colombia trade minister admits exports to US dropped after FTA (Colombia Reports)
- January exports take a hit (Colombia Reports)
- Balanza comercial Colombia y EEUU (Portfolio)
- Colombia holds policy rate to weigh impact of stimulus (Bloomberg)
- Colombian stocks rise while peso plunges to 16-month low (Euroinvestor)
- Colombia stocks decline on banking shares peso little changed (Euroinvestor)
- Colombia swings to trade deficit in November (Wall Street Journal)
- Colombia’s outlook positive despite January trade deficit (Colombia Politics)
- Colombia posts trade surplus in February (Wall Street Journal)
- Investigaciones importaciones (DANE)
- Trade in goods with Colombia (US Census)
- Colombia balance of trade (Trading Economics)