Colombian Update July 9th : Whats New (s) : Gallup, Inflation, Exports....and Football.

IT'S COMING HOME

Well the northern sojourn in Canada is well underway and I feel like an impostor - the simple fact is people here are so damn polite next to the Brit living in Medellin who has become the love child of two bruising cultures, the good news is their politeness does rub off on you very quickly, it almost feels like going into therapy for a few weeks. In fact therapy was almost needed after England’s victory on Tuesday versus Colombia as I found myself almost uniquely positioned on Facebook with I imagine a close to 50-50 split between Colombian and British friends. I have to say after years of defending almost all things Colombian that the players let themselves down - the local press may see it one way but the global press was generally pretty condemning and that is sad to see, hopefully soon enough the bitterness will be forgotten....meantime now looking for a bar in Quebec city to see how the mighty England fair against Croatia. GALLUP This week not too much occurring in Colombia - we will have a quick look at Inflation & Export further along but for the meat of today’s blog let’s look at what Gallup have discovered in their latest survey First of all before we even look at the replies here are two numbers that jumps out at me ZERO & ZERO, that would be ZERO physical interviews and ZERO people polled from the countryside, in fact the 1200 interviews were only carried out in the five main cities - whatever they sell these reports for is too much. Overall we find a more optimistic outlook and arguably a shift to the left in some aspects amid what continues to be a socially very conservative country, it also in my humble opinion clearly shows that the people in some aspects have no idea what is going on when it comes to the economy. Overall the number of people thinking the situation is getting worse has dropped from 68% to 50%, that may be because the bitter election is off the the front pages because judging by the 69% who think the economy is getting worse or the 85% who think corruption is a problem running out of control it isn’t down to those factors. Duque has seen his approval level rise since April from 31% to 56%, of course he has yet to start work yet and even Petro is at 43%. Neither of them can get close to Sergio Fajardo (67%) who has a disapproval level of just 13% - unquestionably he came out of the election process unscathed and with reputation enhanced by staying on message and avoiding the embittered tone of those to his left and right. Duque’s party leader Alvaro Uribe continue to see his popularity erode with a drop from 51-43% in his approval level and for the incoming President this will be a delicate one to handle, he needs to maintain distance but keep the Congress support. In terms of shifting left I refer to the guerrilla situation where 43% now see the situation improving versus the same number seeing deterioration - just two months ago those numbers stood at 25% & 63%. Two months ago we had 36% saying the peace agreement brought an air of peace and tranquility, that number is now 53% - also now 44% say the peace agreement is going in the right direction when it stood at 26% in April. This might be due to some thinking Duque will make changes but more likely, given that there has been a jump in support for the JEP (truth and justice commission) to 50%, it is down to the lack of FARC impact during the electoral process as well as the amount of time the majority of the candidates standing spent defending the process, Duque may have won the run off easily enough but over 60% voted against him in round one. Finally Colombia continues to stick to its roots, 65% see the Catholic Church as a beacon, 56% oppose single sex union and even more (72%) oppose single sex adoption despite overflowing orphanages. On the bright side they see Congress and the Justice system for what they are with 72% & 79% disapproval levels respectively. Now of course those living an hour outside of Medellin or in any other part of the countryside may believe the moon is made of cheese, that the earth is flat and that Simon Bolivar is alive and well living on an island with Sofia Vergara but until Gallup undertakes a more thorough survey we won’t know !!!

INFLATION In terms of prices in June there really isn't a tremendous amount to say, as written after the recent Central Bank meeting the work of JJ Echavarria is done, the inflation monster for now has been slain (although like any great movie franchise it will be reincarnated in a new form at some stage) and there is little for anyone to do. The reading of 0.15% was marginally below consensus as was, naturally, the 12 month reading of 3.20% - YTD we stand at 2.47% and we look set for a 2018 exit rate of ~3.20%, the precise rate is irrelevant at this juncture, what matters is that prices and rates are well under control. Could the Central Bank be tempted to cut ? In short why bother ? Why take a risk ? The marginal value added to the economic expansion wouldn't justify it- better to sit back and put the onus on the incoming Government to get creative, the seeds have been well and truly sown for Ivan Duque to enjoy a free ride economically for the next couple of years at least. A look at last months detail sees little remarkable behaviour with food (0.03%) and housing (0.08%) guaranteeing a benign reading. Looking at other areas, communications were pushed by the 1.95% increase in telephony whilst transport rose due to fuel, buses and airline tickets. Overall though as already stated - steady as she goes.... EXPORTS Sales abroad continue to move in the right direction in May with numbers again boosted by oil with a 36.7% increase, away from the black gold though numbers were, for choice, a disappointment. The overall increase of 5% was of course welcome and indeed ahead of estimates however coffee and coal fell whilst non-traditional sales were up just 1% - it appears as expected that the 29.9% rise in April in that particular area was something of a false dawn. Without wishing to hark on, the country needs badly to expand that export base, it has been over reliant on oil for 15 years now and it is a sector that employs relatively few once it is in its mature stage. YTD of course sales are up 14.5% and one should be grateful for that and additionally there is hope that the key non traditional area will continue to expand however these things are at the behest of external demand which is hard to control.