Economic Outlook

  • October’s monthly inflation was 0.16%, 10 bps above expectations reaching 3.3% in annual terms the highest figure for October since 2011 (4%). This result was driven by increases in transportation and housing prices. The former is a result of hikes in taxi fares, while the latter is explained by soaring electricity prices. Given the observed price dynamics, we have revised our inflation forecast for the remainder of the year, and we now expect total inflation to reach 3.4% by year-end. This year’s inflation results will have an important...

  • In September, the unemployment rate was recorded at 8.4%, down by 0.6 points with respect to the same month of the previous year and 1.5 points below 2012’s result. This fall was accompanied by an increase in the labor force participation rate, up to 64.5% from 63.7% in September 2013. Therefore, the reduction in unemployment is a result of strong job creation, rather than people leaving the labor market, which should help sustain household consumption in the short run. This positive result was observed in both urban and rural areas, where...

  • The COP, as the rest of emerging market currencies, has been subject to increased volatility, mostly as a result of turbulence in international financial markets, due to worries regarding the global economy paired with falling oil prices. While current fundamentals do point to a weaker peso than in the past, as a result of a wider current account deficit, slowing FDI inflows and the interruption of portfolio inflows associated to JP Morgan’s increased COP exposure in two of its indexes, current levels are indicative of overshooting. We...

  • Consumer confidence in Q3 suggests a slight slowdown in household consumption. In September, this gauge fell down to 17.1 as a result a deteriorated perception of economic conditions . Although unemployment has continued to fall, and remains at single digit levels, job creation has concentrated in urban areas, while the reduced unemployment in rural areas is explained by a falling participation rate. This should also have a disparate impact upon consumption between rural and urban areas. Consumer credit, which could also potentially boost...

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