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The national government is currently working on a plan to arrest the economic slowdown and hopes to get support from the private sector, according to multiple officials. In the full picture, recommendations suggest that trust must be strengthened.
María Claudia Lacouture, president of the American Chamber of Commerce in Colombia and Alianza Aliadas, pointed out in a dialogue with Portafolio that the steps taken so far are in the right direction, but now is the time to boost demand and create a favorable situation for investment to grow again.
How do you view the national economic situation?
We at the Chamber have mentioned since January that 2024 will be a challenging year for the economy, and at this moment we are in a state of stagnation. The actions being taken, while necessary, such as lowering interest rates and seeking mechanisms to take advantage of lower interest rates, have necessitated measures that hit not only demand but also supply.
Foreign Direct Investment
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To do this, we must first create conditions that provide businesses with certainty and confidence and that Colombia has the climate or conditions for investment. Ultimately, this is what will bring growth.
How does trust help?
Look, 80% of the growth came from household consumption and 20% from investment. This household consumption accounts for 72% of the 80% that we have already mentioned, and this is due to wages and income, which is no secret to anyone, which is what employers have been investing in formal wages for a long time.
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Without the conditions for investment, growth and dynamism to occur, the sector will indeed suffer, as we have seen with the slowdown and double-digit unemployment. All of this requires dynamism and understanding that they are interconnected, even with investment.
That’s the other 20%…
To be precise, this is the remaining percentage of growth generation. Unfortunately, we are seeing a slowdown in investment (through gross capital formation) at the national level. Here we must also mention that a decline in foreign direct investment was recorded, with a 12% decline in foreign direct investment in the first quarter ending April.
Aliadas President María Claudia Lacouture explained the theme of the congress.
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What do you think of the US warnings about the investment environment?
Today we see a 12% increase in foreign investment, but investments from the United States are up 43%. Of course, we cannot say that this is the result of recent months, investments are the result of years of work, creating favorable space, and we must say that the United States is one of the few countries that is increasing foreign direct investment. . You have to take care of this.
The report warns that they see uncertainty being created in the concept of national sovereignty in key sectors of the Colombian economy. In addition, they combine this with problems related to a slowing economy, a deteriorating business climate, patent protection, intellectual property rights and a large amount of paperwork. They are very precise about the points where work must be done.
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What do you think of the restart plan?
The proposal put forward by the government is an initiative that we should celebrate, not only because a process and a restart plan are needed to call on different players to work together, but also because officials from Dapre and the Democratic Party, such as Laura Sarabia, have called on all sectors to reach a consensus and build together.
However, it is also important to note that there is still a need to provide details on each of the seven elements proposed, including how the resources will be used, what the financing gates will be, what the objectives will be, and more clarity on the actions, as many involve royalties.
Colombian Peso
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What do you think of the Financing Law?
Let’s start with a question: Who will be squeezed the most? For us, the best financing method is nothing more than tax reform, which is spending austerity and efficient use of resources.
We see that today the investment budget, which would most contribute to the development of the country’s production, is 22%, while the average is 27%. Moreover, we see with great concern that this budget is being reduced in the 2025 budget proposal, which is why we urgently call for a reassessment of this process and a tightening of spending, especially in the operational sector; that is where the cuts should be made. The state has no room for tax increases.
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And mandatory investment…
“Mandatory investments would have a significant impact on the viability of the financial sector, which would be fragile in the fragile economic conditions we are currently seeing. We hope that this decision is the result of the consultations mentioned by Asobancaria and the Ministry of Finance itself.”
It must be taken into account that mandatory investments can be developed through government development entities such as Bancoldex, Finagro, Banco Agrario or Grupo Bicentenario. We must combine all of this and translate it into effective action through this Bicentennial Group, which is much better than such actions that generate more uncertainty, mistrust and potentially greater fragility in an already fragile system.
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