Colombian Update July 30th : What's New (s) : Politics, Central Bank, Unemployment, Confidence.

INVESTIGATION

One subject which I avoided until now in order for things to play out a little was the resignation of ex President Uribe from his Senate seat but even at this point it is not 100% clear as to whether this has taken place even though he has publicly stated that that letter pertaining to this has been sent to the head of the house. All this comes after the Supreme Court announced an investigation into potential Witness Tampering - regardless of whether there is a conviction, which most doubt, this would be a massive blow not just to the Centro Democratic Party where he is omnipotent in the Senate but also to incoming President Duque, Uribe was the king maker in May & June and Duque has had to put his hands in the fire to say that he fully believes in Uribe’s innocence which of course is an issue if the Fiscalía, who will now hear the case, rule against him. According to those who oppose Uribe his resignation from the Senate is in order to avoid the Supreme Court and instead place himself at the mercy of the Fiscalía who is considered by many to be less likely to rule against Uribe, this as opposed to the Supreme Court where there are multiple voices to be heard the Fiscalía is one solo voice. Having observed Colombia justice at work over the past decade or so any outcome is likely to take time. That though is all somewhat of an aside - the main point is that even before Duque has taken office we are perhaps already going down the road that many feared, one which sees a Congress with a massive amount of work to do over the next four years instead distracted by sort of divisive hate politics we saw all through the election period. The social networks and press had almost no room for anything else this weekend, Uribe himself released a video defending himself whilst some elements of the press were happy to trawl up various past accusations against the ex-President. Hopefully this won’t be the case but so many from the left have been baying for an investigation into Uribe for so long that they are like a dog with a bone - outside agencies such as Human Rights Watch have also been having their say and the situation is likely to dominate the press over the coming weeks and months, all this against the background of the JEP (truth and justice commission) which has started it work. In terms of the Senate this is a huge blow, Uribe’s vote is worth no more than any other member and he will be replaced by another member of his party but he is more influential than the rest of his Centro Democratic colleagues put together, a fair anecdote would be the Portuguese football team without Ronaldo, everything in the party revolves around him. Of course he will still be a voice as any legal process develops and as mentioned the Fiscalia is likely a less hazardous route for him to traverse but as Ivan Duque is sworn in a weeks time he will no doubt have his fingers crossed that the situation doesn't grow any more controversial. CENTRAL BANK The latest committee meeting was put simply a non-event and perhaps that is something that should be celebrated - after all if the 7 wise men and women have little to do it means things must be going reasonably well. In the end they left rates at 4.25% which is what literally 100% of analysts expected - Dr Echavarria and his team have done their work for now, the next move is likely to be upwards but that will probably be well into 2019. Both Echavarria and FinMin Cardenas made comments after the meeting, Cardenas himself will be replaced by incoming FinMin Carrasquilla come the next meeting, and they both allured to the fact that inflation was in a good spot and that we will close 2018 somewhere around 3.3-3.4% and that whilst growth is still below its potential with the committee still officially looking for 2.7% this year, there is now some potential upside to that number potentially as far as 3%. We did have the debut on the committee of Carolina Soto who replaces Adolfo Meisel and becomes the second lady on the committee of seven which in this day and age is always good news. UNEMPLOYMENT After recent stability in the data this past month of June saw an uptick in the data. Starting with the urban number we find a rate of 11.1% which was both well above analysts estimates of 10.3% but also the reading 12 months ago of 10.8%. Moving to the national number we find ourselves in a similar situation with the 9.1% reading being up on the 8.72% in June 2017. On the bright side looking at the national data we had a fourth consecutive month with occupation above 22 million, all four of those readings are amongst the highest registered since comparable data began in 2001 although the 22.6 million for last month was 200k below that of June 2017. We have to wait and see in July and August whether this is the start of a pattern of increases although that would run contrary to what the economic reading have been showing us however one issue is the extremely young demographics of the population which gives one the sensation that the Government is running to stand still when it comes to the unemployment rate. Whilst opinion polls always reflect a population that want more done about unemployment over recent years the trend has been firmly downwards, the hope will be that with the economy having turned a corner we will see a pick up in occupation levels. CONFIDENCE

Since my last communication we had the June confidence data from Fedesarrollo’s who concentrate on the viewpoint of the business sector and as we saw with consumer confidence recently there was another pick up.

We saw Retail Confidence at 30.7% which was up 3.7% compared to May almost double the reading of June 2017. It was the same pattern when it came to the Industrial Sector where we saw a recovery after a May number that was in the red to a positive print of 2.4% - the Retail Sector has consistently displayed higher confidence levels over the past 12 months.

There was an overall optimism with regards to both the current situation and future outlook - there was also positivity when it comes to the economy. These numbers should not be any great surprise given the uptick seen in both Retail Sales and Industrial Production readings over the last 6 months.