Despite a drop in national exports, Colombia’s first quarter industrial production grew in comparison to the previous year, as did the country’s overall sales, according to a report published Wednesday by the National Business Association of Colombia ANDI.
The report shows it’s been a mixed year so far for Colombian industry, which added 36,000 new jobs but continues to watch its international competitiveness diminish. Industrial production and sales grew 3.8 and 5%, respectively, even as international exports dropped 4.6%.
Textile production saw the most growth (18.7%), on top of a 4.7% increase in sales that included a 16.4% domestic increase. The automotive sector was also bolstered by strong domestic sales growth of 10.9%, which made up for a 5.4% overall sales drop and helped prop up a 10.8% increase in production. Food production, meanwhile, went up 9.8% as compared to Q1 2013, with 10.7% overall sales growth and 9% growth domestically, according to the report.
The paper and cardboard and non-metal mineral sectors were also among those to see positive growth trends in both sales and production.
On the other end of the spectrum, production fell in the autoparts (2.9%), refined petroleum (4%), and chemical (1.5%) sectors.
Free trade is not without complications
An ANDI survey included in the report found that the main problems facing entrepreneurs are — in order — high market competition, low demand, the high cost and low supply of raw materials, foreign exchange, and smuggling. Poor infrastructure and high logistics costs was the sixth most reported obstacle.
Additionally, 28.1% of business leaders surveyed pointed to low working capital; 10.6% to low demand; 9.0% to taxes; and 5.6% to infrastructure and logistic costs as obstacles preventing realization of investment projects, according to ANDI.
The report also lends credence to the widespread opposition to Colombia’s aggressive promotion of free trade policies. Critics have already pointed out the struggling autopart sector in particular as evidence that Colombian industry cannot compete with heavily subsidized international production centers.
Such arguments have seen Colombia’s pending FTA with South Korea held up in Congress, as the gradual implementation of the United States-Colombia FTA has contributed to progressively falling export rates to Colombia’s largest trade partner.
Ending on a good note
Overall, the report seems to point to a positive industrial climate in Colombia, whose economy is still largely dependent on commodities production.
The ANDI survey found that 62% of respondents feel the industrial situation in the country is favorable to their business, while 52% expect additional investments this year. When asked about the immediate future of their businesses, 45.2 % said their expectations have improved.
All those figures represent significant increases from the previous year’s survey.