Colombia’s industrial production, excluding coffee-
processing, contracted 6.6% in June from the same month in 2008, according to
official data released Wednesday.
The National Statistics Department, known as DANE, said production of steel
industries fell 37.5% in June, while production of vehicles contracted 31.1%.
Vehicle production declined after Venezuelan President Hugo Chavez granted
permits for Colombian car producers to sell 5,000 public transport vehicles and
5,000 heavy cargo trucks earlier this year.
Venezuela’s 2009 import quota for Colombian vehicles is substantially lower
than the 22,500 quota granted in 2008 and the 45,000 quota in 2007.
Recently, Chavez ordered a halt to imports of 10,000 vehicles from Colombia as
tensions between the two countries flared.
“Colombian assemblies have sharply reduced their car production and have cut
hundreds of jobs because Venezuela hasn’t bought a single car so far this year,”
said Carlos Ramos, an analyst at local brokerage Interbolsa.
The industrial output drop was stronger than the 4.98% decline expected by
Tensions between Colombia and Venezuela worsened when Colombia announced a
deal on July 15 to allow U.S. forces to coordinate anti-drug operations from
seven of its military bases.
The agreement irked Chavez, who suggested that U.S. forces would use the
Colombian bases not to combat drug trafficking but to target the neighboring
Employment in the industrial sector fell 7% in June from the same month in
Industrial production in the first half of the year contracted 8.4%, dragged
down by the decline in vehicle output, which contracted 44%.
In the 12-month period through June, industrial production shrank 7.6%. (Dow Jones)