Colombian Update : What's New (s) : Chocolate, Imports, FinMin, Confidence, EPM.....

WILLY WONKA

As a man on a self inflicted diet it is hard to imagine a worse spot to find yourself than Nutresa's chocolate factory in Rio Negro - but that is where I spent three hours yesterday and predictably the platter of sweets at the outset in combination with other handouts as we toured the facilities mean't the previously intact willpower fell apart ! I was wearing my Consular hat for the day however regardless of your head wear it is impossible not to be impressed by the scale of a facility which you can literally smell before it looms into view - there is something about that soft whiff of chocolate on the breeze which is perhaps only equalled by that of fresh cut grass. The depth and experience of the professionalism is perhaps perfectly summed up by Luis Arturo who has already spent 46 years making sweet-tooth's happy both in Colombia and beyond. The premise of the visit was related to cacao and sustainability and the time we spent with those running quality control for the aforementioned product was a testament to the high standards to be found. The factory only accounts for around 40 of Nutresa's full range of over 600 products however nonetheless it is a mass of wrappers, dripping chocolate and if you ever wondered what a 1 ton sack of peanuts looks like then this is the place for you.

Never a cool look !

IMPORTS A decent import number for July with an increase of 15.9% YoY to USD4.34bn - this was driven by manufacturing which accounted for USD3.37bn as that sector rose 17.9% - a sub sector to highlight was chemicals which saw an increase of 25.1%. Other areas to highlight were agriculture (+20.2%) - although surely this is an area where Colombia should surely be producing their own goods - and combustibles with accounted for USD413.5mn of purchases and rose 0.2%. The largest market of origin was the US which saw an increase of 15.1% YoY to USD1.078bn and accounted for a total of 24.8% of the basket. Overall we have now seen a YTD increase of 8.2% in imports and again manufacturing (+10%) and agriculture (+11.8%) have been drivers thus far in 2018 - in the latter category animal feeds have seen an expansion of 27.5%. All the above created a trade deficit of USD557mn due to the continued indifference when it it comes to oil sales as well as issues in other areas such as coffee prices. All this has created a seven month deficit of USD3.4bn however it should be noted that even with the above issues the deficit has shrunk by 23% in comparison with 2017. Overall manufacturing purchases need to be regarded positively amid signs of a pick up in the economy. CONFIDENCE A couple of days ago I referred to the July 'blip' in Consumer Confidence however the latest reading for August of 4.7 is a further drop from the 11.1 recorded in July which in turn was down from June....we may be in considerably better shape than at the end of 2017 when we were still in negative territory however what has gone awry ? Personally all I can think is that people had high expectations of the post election environment and thus far they have been disappointed - it could be down to the proposed tax reform and the perceived effect that will have on consumers or perhaps a more general malaise related to the early days of the Duque presidency however given the benign state of both inflation and interest rates it is hard to see anything beyond politics as the root cause. This is a number that needs to be carefully watched especially once the tax reform details are announced by the Finance Minister.

POLITICS Speaking of the Finance Minister, Alberto Carrasquilla spend a good chunk of Tuesday evening defending himself against last weeks accusations regarding 'Water Bonds' and his relationship to a company with Panama connections. Whilst he came under heavy attack from the left wing opposition, who make a very good point in terms of the crippling interest rates being levied on the provinces, and although the situation still needs to be looked at by a committee, by the end of the evening the FinMin had won the day receiving the support of the vast majority of the Congress. This all took 8 hours, 8 hours that could have been spent far more wisely - it is the kind of politicking that Colombia simply cannot afford - as indicated by the Consumer Confidence data the country is in need of leadership - not leaders bickering amongst one another.

EPM As readers will be fully aware the previously bullet proof reputation of the Medellin energy giant has been dragged through the mud over recent months due to the near cataclysmic disaster at Hidroituango which was narrowly avoided but which has left a financial scar on both EPM and the city itself. In light of that and various accusations of misinformation one would imagine that EPM would be looking to repair their reputation at the first opportunity - what was not required, irrespective of the motives, was the company admitting to having subjected their employees to a polygraph as they try to identify the source of leaked information...not cool.