Colombia Outlook 2Q20 - Macroeconomic performance perspectives: the challenge of taking care of the health and wellbeing of colombians
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Colombia Outlook
2Q20
Macroeconomic performance perspectives:
the challenge of taking care of the health and
wellbeing of colombians
Closing date: April 23 (except for COVID-19 data)
Creating Opportunities01
Strong impact of COVID-19 on
global growth produces an
unprecedented public policy
reaction
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 3
COVID-19 is a human tragedy. Colombia within Latin-American has
managed to maintain numbers relatively low
DAILY INFECTED PEOPLE IN SELECTED COUNTRIES DAILY DEATHS IN SELECTED COUNTRIES
(3-DAY MOVING AVERAGE) (3-DAY MOVING AVERAGE)
Note: 17th - 20th February WHO reported all confirmed cases, including both laboratory-confirmed and those clinically diagnosed
Source: BBVA Research, Johns Hopkins University (data updated up to 00:00 GMT April 27)BBVA Research / Colombia Outlook 2Q20 4
Activity indicators already show the highly contractive effects of
COVID-19 in the main geographies
PMI INDICATORS The supply shock due to confinement is the main
(MORE THAN 50: EXPANSION; LESS THAN 50: CONTRACTION) impact channel in the very short term
Other channels:
60
55 ○ Demand (confidence, social consumer
50
goods)
○ Financial (borrowing costs, financial wealth
45 destruction)
40
○ Other supply shocks (global supply chains)
35
Confidence and employment indicators show a very
30 severe impact in 2Q20
25 In China, there are already signs of a rapid recovery
Jul-19
Oct-19
Feb-20
Mar-20
Nov-19
Dec-19
Aug-19
Sep-19
Jan-20
in activity
Europe USA China
Source: BBVA Research based on Haver.BBVA Research / Colombia Outlook 2Q20 5
High uncertainty: we anticipate a deep recession
with a rapid but incomplete recovery
Main assumptions of our economic scenario
EXPANSION OF CONFINEMENT ECONOMIC STIMULUS
COVID-19 MEASURES MEASURES
China, Italy and Spain as a Around 6 to 8 weeks They will be maintained
benchmark for the evolution or amplified
of new cases Gradual reversal
High effectiveness (real
No new cycles of and financial)
widespread contagionBBVA Research / Colombia Outlook 2Q20 6
Growth forecasts: a global recession in 2020, followed by a
partial recovery in 2021
-7 -4.4 -3 2 3.4 5
USA
2019
2020 2.3 2021
-8 -5.2 -3 2.5 4.1 5.5
Eurozone
2019
2020 1.2 2021
1.0 2.2 3.5 4.5 5.5 6.5
China
2019
2020 2021 6.1
-2.4 4.8
World
2019
2020 3.0 2021
GDP growth in %. Forecasts for 2020 and 2021
Source: BBVA ResearchBBVA Research / Colombia Outlook 2Q20 7
The global recession is dragging oil prices down,
despite the recent supply reduction agreement
OIL: BRENT
(DOLLARS PER BARREL, ANNUAL AVERAGE)
OPEP+ has agreed to cut production, ending the
conflict between Russia and Saudi Arabia
61 61
68 Even so, prices continue to be very low due to the
64 collapse of global demand
61
However, they are expected to recover as world
growth accelerates and supply adjusts
50 This low price environment is especially damaging
to countries that export commodities
39
2017 2018 2019 2020(f) 2021(f)
Actual Previous
(F) Forecast.
Source: BBVA ResearchBBVA Research / Colombia Outlook 2Q20 8
Regional financial assets depreciated swiftly with the outbreak of
COVID-19, by have shown a shy recovery in recent weeks
LATAM EXCHANGE RATES, SELECTED COUNTRIES LATAM CDS, SELECTED COUNTRIES
(INDEX, 20 FEB 2020=100) (INDEX, 20 FEB 2020=100)
600
110
105 500
100
95 400
90
85 300
Depreciation
80
75 200
70
100
65
60
0
20-Feb
27-Feb
5-Mar
26-Mar
2-Apr
9-Apr
12-Mar
19-Mar
16-Apr
23-Apr
19-Mar
12-Mar
26-Mar
5-Mar
20-Feb
27-Feb
2-Apr
9-Apr
16-Apr
23-Apr
Peru Brazil Mexico Chile Colombia
Peru Brazil Mexico Chile Colombia
Source: BBVA Research with Datastream and Bloomberg dataBBVA Research / Colombia Outlook 2Q20 9
Uncertainty is exceptionally high and the balance of
risks is tilted to the downside
ECONOMIC UNCERTAINTY INDEX (*) • Epidemiological uncertainty:
(AUGUST 21st 2019 = 100)
• Pandemic control deadlines
• Speed of the “opening” process
160
• Possible new waves of infections
140 • Availability of a vaccine or treatment
• Economic uncertainty:
120
• Stimulus effectiveness
100 • Effect on public and private debt levels
• Financial uncertainty
80
• Rebound of financial tensions
60 • Systemic crisis risk
40
•
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
The pandemic raises many questions about the
long term
(*) Weighted average sentiment of media news where the associated "economy" and "uncertainty" topics
appear and weights it by the coverage of these news.
Source: BBVA Research based on GDELT data02
The effects on the colombian
economy depend both of the
advancement of the sanitary
crisis as of the policy response
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 11
COVID-19 effects will materialize on the Colombian economy
through internal and external channels
EXTERNAL CHANNELS INTERNAL CHANNELS
External demand. Reduction in income and Supply shock. Transitory paralysis of
weak global growth will not be compensated activity to safeguard lives.
by depreciation.
Lower local demand. Reduction in national
Lower oil price. Impact on exports, disposable income and a deterioration of
Exchange rate, investment and fiscal the labor market.
balance.
Fall in investment. Lower local and foreign
Financial turmoil. Grater global risk aversion investment due to uncertainty, lower
affects the valuation of local assets. demand and unutilized installed capacity.BBVA Research / Colombia Outlook 2Q20 12
Growth prospects will depend on the length of confinement, policy
effectiveness and external environment
STRONG CONFINEMENT WEAK CONFINEMENT RECOVERY
AROUND 1.5 MONTHS AROUND 1.5 MONTHS
Consumption shrinks to Consumption recovers A low “social expenditure” remains with
essential expenditure gradually low oil prices
Food, hygiene products, health and Non essential expenditure as clothing Tourism activities, restaurants and
communication technology services and online commerce massive events take time recovering
Lower supply of products Non essential sectors start to reopen Global growth with smaller imported
gradually component
Closure of non essential sectors Help reactivate the economy and labor Exports take time recovering
income
Greater public expenditure: Lower disposable Social indicators take
health and transferences income time recovering
Help mitigate the fall in consumption Lower oil prices and deterioration of the New subsidies and
(for low income households) labor market support programsBBVA Research / Colombia Outlook 2Q20 13
The first response under the pandemic has been to protect the
most vulnerable households
Direct transferences to the most vulnerable (subscribed in prior social
programs, solidarity income and VAT returns)
Utilities financing for some months and free reconnection
Government
Tariffs reduction to some imported health products
Protection to public employment
Financing optimization and investment in health expenditure
Deferral of monthly payments for consumption credit and mortgages to the
financial system for up to six months
Others Protection to newly unemployed affiliated to “cajas de compensación”, worker
supplementary wellbeing services institutions
Compensation of partial loss in labor income with private “layoff funds”
Free reconnection of mobile phone services03
Sector effects will be
heterogeneous both in the
confinement and recovery
periods
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 15
The shock will have a heterogeneous impact amongst economic sectors due
to confinement, social distancing and travel restrictions
High impact Intermediate impact Low impact
Tourism, Non-food Communications,
Hotels and manufacturing real state and
restaurants and mining professional
services
Transport Construction Government* and
utilities
Entertainment Non-basic good Agriculture, food
retailers manufacturing and
basic good retailers
Social distancing Travel restrictions Confinement
* Includes health, education and public administrationBBVA Research / Colombia Outlook 2Q20 16
This differences will map on the intensity and duration of the
effect over the different sectors
SECTOR ACTIVITY DURING THE CONFINEMENT AND RECOVERY PERIODS
(IMPACT OVER ITS PREVIOUS LEVEL = 100%, WEIGHT ON THE GDP IN %)
(weight)
100%
Agro, Agro industry, Health, Public
Services and Communication
30 Low
Impact
Real estate, financial and
professional activities
21
Remaining industry 9
Commerce 8 Intermediate
Impact
Mining 6
Second Quarter Construction 5
Transport 5 High
3-mar 20-mar 31-mar 13-apr 27-apr 11-may 30-may 23-jun 30-jun 15-jul 30-jul 12-aug
Impact
Previous l. Strong confinement Light confinement Recovery Tourism, entertainment and 6
restaurants
Source: BBVA Research04
Private consumption and
investment will respond with
significant contraction in
2020, to then recover
gradually
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 18
High frequency indicators show the deterioration in private
consumption in several economies
BBVA CONSUMPTION INDICATOR BY COUNTRY* BBVA CONSUMPTION INDICATOR BY CITY*
(7-DAY AVERAGE YoY, %) (7-DAY AVERAGE YoY, %)
80 50
60 30
40 10
20 -10
0 -30
-20 -50
-40 -70
-60 -90
28-Feb
8-Mar
5-Jan
10-Feb
19-Feb
4-Apr
1-Feb
17-Mar
26-Mar
13-Apr
22-Apr
14-Jan
23-Jan
-80
10-Feb
2-Mar
9-Mar
6-Apr
6-Jan
17-Feb
24-Feb
3-Feb
16-Mar
23-Mar
30-Mar
13-Apr
20-Apr
27-Jan
13-Jan
20-Jan
Spain Turkey Mexico Bogota Medellin Cali
Colombia Peru Argentina Barranquilla Cartagena Bucaramanga
* Shadow: 2019 holly weak base effect
Source: BBVA Research with transactional information of purchases made with BBVA debit and credit cards
According to BBVA Research sector indicators, airlines, clothing and entertainment are the most affected sectors. While,
health and food sectors had an important dynamic at the beginning of the confinement period, but start to moderateBBVA Research / Colombia Outlook 2Q20 19
Not all consumption groups perform and recover in the same manner.
Consumption will rebound, but will remain growing less
CONSUMPTION GROUPS PRIVATE CONSUMPTION
(RESPECT TO THE LEVEL PRIOR TO CONFINEMENT =100%) (ANNUAL VARIATION, %)
6
(f) 5
4
100%
3
2
1
0
-1
-2
t Month Month Month Month Month Month -3
t+1 t + 1,5 t+2 t+3 t+4 t+9
-4
Previous level Total confinement light confinement Recovery
-5
Food and beverage Alcoholic products and tobacco
2020(f)
2021(f)
Avg. 22-25(f)
Avg. 95-97
Avg. 98-99
Avg. 00-02
Avg. 03-07
Avg. 08-09
Avg. 10-14
Avg. 15-19
Clothing Housing and public services
Furniture Health
Transport Communcation
Recreation and culture Education
Restaurants and hotels
Source: BBVA Research projections with DANE dataBBVA Research / Colombia Outlook 2Q20 20
Two dynamics in investment: in the short run a strong contraction.
Later, construction should recover faster than machinery
INVESTMENT GROUPS FIXED TOTAL INVESTMENT
(SEASONALY ADJUSTED SERIES, INDEX DEC19 =100, %) (ANNUAL VARIATION, %)
105 15
(f)
100
10
5
95
0
90 -5
-10
85
-15
80
-20
75 -25
Avg. 95-97
Avg. 98-99
Avg. 00-02
Avg. 03-07
Avg. 08-09
Avg. 10-14
Avg. 15-19
2020(f)
2021(f)
Avg. 22-25(f)
70
1-Dec
1-Dec
1-Dec
1-Jun
1-Jun
1-Mar
1-Sep
1-Mar
1-Sep
Machinery and equipment Construction
Source: BBVA Research projections with DANE dataBBVA Research / Colombia Outlook 2Q20 21
Growth will deteriorate in the short run, later it will recover with a fast
rebound but should stabilize at more moderate levels
SEASONALY ADJUSTED GDP VARIATION OF ANNUAL GDP
(QUARTER VARIATION AND INDEX MAR19=100) (ANNUAL VARIATION, %)
112% 6% 12
10
(f)
4%
108% 8
2%
6
104% 3,9
0% 3,3
4
-2% 2
100%
0
-4%
96% -2
-6%
-4 -3,1
92% -8% -6
Dec-21
Jun-19
Sep-19
Dec-19
Jun-20
Sep-20
Dec-20
Jun-21
Sep-21
Mar-19
Mar-20
Mar-21
-8
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
Sep-19
Sep-20
Sep-21
Mar-19
Mar-20
Mar-21
Quarterly growth (t/t, rhs, %) Current forecast level
Previous forecast level
Source: BBVA Research projections with DANE data05
The piority of the measures
to confront this situation is
to protect emploument and
the wellbeing of colombians
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 23
COVID-19 high impact sectors account for 33% of total employment
and 27% of labor income
High impact Intermediate impact Low impact
Tourism, Non-food Communications,
Hotels and manufacturin real state and
restaurants g and mining professional
services
Transport
Construction Government* and
utilities
Entertainment
Agriculture, food
Big retailers manufacturing and
Small retailers basic good retailers
7,4 $6,3 4,1 $4,5 10,9 $12,7
mill. bn/month mill. bn/month mill. bn/month
of jobs wage mass of jobs wage mass of jobs wage mass
Source: BBVA Research with DANE dataBBVA Research / Colombia Outlook 2Q20 24
Therefore, protecting employment and smoothing workers income
loss is a priority, and thus it is key to protect entreprenual tissue
FORMAL EMPLOYMENT DISTRIBUTION ACCORDING
TO THE SIZE OF THE COMPANY*
(% OF COMPANIES AND OF EMPLOYMENT, 2018)
Big (0,5% of total
companies) 47,5
Medium (1,5%) 17,9
Small (5,6%) 18,0
Microenterprise
(92,4%) 16,6
0 10 20 30 40 50
Big industrial company year revenue > 61.8 bn pesos. Medium industrial company year revenue between 7.3bn pesos and 61.8bn pesos. Small industrial company year revenue < 7.3bn pesos.
Source: BBVA Research with Confecamaras dataBBVA Research / Colombia Outlook 2Q20 25
Both, government and the private sector have responded with
measures to protect employment and companies
Credit guarantees from the National Fund of Guarantees for SMEs and
independents for payroll and working capital purposes (80% to 90%
guaranteed)
Government Flexible credit lines with second floor public entities and Banco Agrario
Deferral of regional taxes in most principal cities of the country
Deferral of monthly payments of commercial credit due to the financial
system
Optional payment of only 3% of pension payments to workers for up to
Other 3 months
Possibility to use countercyclical provisions and not to include credit
delinquencies due to deferrals of clients payments
Source: BBVA Research and MinHaciendaBBVA Research / Colombia Outlook 2Q20 26
Despite the efforts, the unemployment rate will increase in 2020 and
only gradually recover in 2021
URBAN UNEMPLOYMENT RATE
(% OF THE ACTIVE ECONOMIC POPULATION)
20
18
16
14
12
10
8
6
4
2
0
2020 (f)
2021 (f)
2022 (f)
2023 (f)
2024 (f)
2025 (f)
2012
2019
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2013
2014
2015
2016
2017
2018
Source: BBVA Research projections with DANE data06
The Central Bank acted
swiftly to guarantee liquidity
for the economy, in addition
reduced interest rates given
a lower expected inflation
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 28
Central Bank actions focused initially on supporting the proper
functioning of the system of payments, and later in other measures
Liquidez Liquidez Provisión de
Reserve transitoria permanente divisas
Interest rate Transitory Permanent
requirement FX liquidity
reduction liquidity liquidity
reduction
50pb rate reduction in Reserve requirement Authorized other The Central Bank will The Central Bank
March reduction of 11% to 8% institutions in the complete a COP14tn auctioned USD2.8bn:
for money market and financial sector to asset purchase USD2.0bn in 30 day
New expected savings and of 4.5% to participate in repo NDFs and USD0.8bn in
reductions in coming 3.5% for CDs of up to operations Of which, COP10tn will 60 day swaps
months (125pb) 18 months be of private debt and
Extended the maturity COP4tn in public debt The Central Bank was
Policy rate could reach This resources will be of repo operations and granted access to the
its all time low with a used to buy public debt allowed private debt as FED dollar line (FIMA)
real negative rate to finance the collateral and extended the
government (TDS) flexible line with the IMF
TDS will may be used
as collateral in repo
operations with the
Central BankBBVA Research / Colombia Outlook 2Q20 29
We expect additional monetary policy rate reductions for 125bp in
the second quarter of 2020, reaching a negative real rate
NOMINAL AND REAL MONETRAY POLICY INTERSET RATE
(E.A.; %)
15
13
11
9
7
5
3
1
-1
-0,39
-3 -1,65 -1,36 -1,03
-5
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Nominal rate Real rate (Expected inf.) Real rate (Current inf.)
Source: BBVA Research with DANE and Banco de la República dataBBVA Research / Colombia Outlook 2Q20 30
The global shock and the fall in oil prices pressure the exchange rate
in Colombia with an average depreciation of 18% in 2020
MONTHLY AND ANNUAL AVERAGE EXCHANGE RATE
(PESOS PER DOLLAR AND ANNUAL AVERAGE DEPRECIATION IN PARENTHESIS)
4300
4100 3863 (18.0%) (f)
3900
3700
3500 3273 (10.7%)
3300 3525 (-8.7%)
2956 (0.2%)
3100
2900
2700
2500
Jul-18
Jul-19
Jul-20
Jul-21
Dec-17
Jan-18
Jun-18
Aug-18
Sep-18
Jan-19
Mar-19
Jun-19
Aug-19
Sep-19
Jun-20
Aug-20
Sep-20
Jan-21
Feb-21
Jun-21
Aug-21
Sep-21
Feb-18
Mar-18
Apr-18
Oct-18
Nov-18
Dec-18
Feb-19
Apr-19
Oct-19
Nov-19
Dec-19
Jan-20
Oct-20
Nov-20
Dec-20
Feb-20
Mar-20
Apr-20
Mar-21
Apr-21
Oct-21
Nov-21
Dec-21
May-18
May-19
May-20
May-21
Exchange rate Average exchange rate for the year
Source: BBVA Research with Banco de la República dataBBVA Research / Colombia Outlook 2Q20 31
In 2020 inflation will remain within the target range and will close at
3.4%. Its descent will continue in 2021 closing at 2.8%
INFLATION BY TYPE
(ANNUAL VARIATON, %)
7
(f)
Headline
2020: 3.4%
6
2021: 2.8%
5
4
3
Core
2020: 3.4%
2 2021: 2.7%
1
0
Foodstuffs
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Feb-18
Feb-19
Feb-20
Feb-21
Dec-17
Aug-18
Dec-18
Aug-19
Dec-19
Aug-20
Dec-20
Aug-21
Dec-21
Jun-18
Jun-19
Jun-20
Jun-21
-1 2020: 3.4%
2021: 3.2%
-2
Total Core Foodstuffs
Source: BBVA Research projections with DANE and Banco de la República data07
The need for external
savings, the fiscal deficit
and public debt will grow
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 33
External deficit will be pressured by the commercial balance and fewer
remittances. Lower profit remission will partially cushion this effects
CURRENT ACCOUNT DEFICIT DECOMPOSITION CURRENT ACCOUNT DEFICIT, FDI AND RESERVES
(USD BILLION) (% OF GDP)
25 6 6
5,0
20 4,7
5
4,3 5
3,9
15
4 4
10
3 3
The financing of the
5
external deficit will be
2 2 completed with
0 external debt and the
use of public savings
-5 1 1
abroad
-10 0 0
2020 (f)
2021 (f)
2018
2019
2018 2019 2020 (f) 2021 (f)
Trade balance Services balance
Factor income Net transfers Accumulation of international reserves
Current account deficit
Current account deficit (% GDP)
FDI
Source: BBVA Research projections with Banco de la República dataBBVA Research / Colombia Outlook 2Q20 34
The fiscal deficit of the Central National Government and its
financing needs will increase driven by the countercyclical fiscal
policy and lower expected revenue
Countercyclical Direct transferences to the most vulnerable, investment in the health sector.
Capital increase of the National Fund of Guarantees with resources of second floor
fiscal policy public banks and FONDES, among others
Revenue Lower activity, lower oil prices and an increase in informality with lower capacity to
avoid tax evasion all reduce central Government revenue
reduction
Increase in the fiscal deficit financed mainly with debt with the regions (funds from
Additional regional savings), with multilateral credit and other movements (such as reserve
requirement reduction to finance public debt issuance and the movement of the
Financing programmed retiree fund from private pension funds to the public pension
administrator, among others)BBVA Research / Colombia Outlook 2Q20 35
The structural strength of the economy gained in the past 30 years
allows to face the shock on a more firm standing
Exchange rate Independent Fiscal rule and Credit
flexibility monetary policy prudential regulation Reputation
Capacity to absorb Reaction capacity in Capacity to deliver Market confidence in
external shocks terms of liquidity and countercyclical policies Colombian authorities,
reducing their effects rates. Ability to carry in economic their capacity of
on the real economy: out countercyclical deceleration cycles response in the
production and policies within the scheme of the current situation and
employment fiscal rule. our long standing
commitment of
Ability to use payment
countercyclical
provisions to confront
lower liquidity conditions08
“Exit” strategies, the new
normal and some lessons
from the current situation
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 37
The coordination of the exit strategy is a priority, at least in three
levels.
Economic Social Relations with the
Activity Services World
Careful selection of ¿How to normalize ¿How to open borders
sectors and education? to the transit of
geographical zones to people?
reactivate ¿How to have
preventive and curative
Continue healthcare of other
safeguarding ¿How to activate
diseases? global value chains?
employment and
companies through Careful selection of
public policy during social groups with
the “exit” strategy “normal” activityBBVA Research / Colombia Outlook 2Q20 38
The new normal: global relations, sector order and household
decisions will be different
Expenditure and
Policies and
economic The Household
world design
sectors
Higher debt and fiscal Lower “social” Deterioration of social
deficit will be “more consumption indicators
accepted” Change in sector
People with stable
relevance, relative
income, will prioritize
Credit rating scores prices of goods and
savings?
reduce worldwide services
Greater labor
A more digital world participation, pursue
A less open world of formalization?BBVA Research / Colombia Outlook 2Q20 39
Lessons looking forward
New Rules vs.
Precaution
givens Flexibility
The value of
Health sector
Rules in good times allow entrepreneurial
strengthening
for flexibility in bad times digitalization
Labor formalization
and safeguarding of Public support is
employment crucial for life quality
and recovery The value of savings
Know ourselves as a for companies,
society households and
¿detailed individual Future generations
will have to help bear society as a hole
census ?
the costs of this crisisAnnex
Forecast summary tables
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 41
Principal macroeconomic variables
TABLE A1. MACROECONOMIC FORECAST
2016 2017 2018 2019 2020 (f) 2021 (f)
GDP (% y/y) 2.1 1.4 2.5 3.3 -3.1 3.9
Private Consumption (% y/y) 1.6 2.1 3.0 4.6 -4.8 5.6
Public Expediture (% y/y) 1.8 3.6 7.0 4.3 5.0 2.2
Fixed Investment (% y/y) -2.9 1.9 1.5 4.6 -8.1 2.8
Inflation (% y/y, eop) 5.8 4.1 3.2 3.8 3.4 2.8
Inflation (% y/y, average) 7.5 4.3 3.2 3.5 3.5 3.0
Exchange rate (eop) 3,001 2,984 3,250 3,388 3,840 3,430
Devaluation (%, eop) -4.7 -0.6 8.9 4.3 13.3 -10.7
Exchange rate (average) 3,055 2,951 2,957 3,273 3,863 3,525
Devaluation (%, eop) 11.4 -3.4 0.2 10.7 18.0 -8.7
Policy interest rate (%, eop) 7.50 4.75 4.25 4.25 2.50 3.00
DTF rate (%, eop) 6.9 5.3 4.5 4.5 3.0 3.2
Fiscal Balance Central Nation Government (% GDP) -4.0 -3.6 -3.1 -2.4 -5.8 -3.9
Current Account (% GDP) -4.3 -3.3 -3.9 -4.3 -4.7 -5.0
Urban unemployment rate (%, eop) 9.8 9.8 10.7 11.1 15.3 14.1
(f) Forecast.
Source: BBVA Research with DANE, Banco de lla República and Ministerio de Hacienda dataBBVA Research / Colombia Outlook 2Q20 42
Principal macroeconomic variables
TABLE A2. MACROECONOMIC FORECAST
GDP Inflation Exchange rate Policy interest rate
(% y/y) (% y/y, eop) (vs. USD, eop) (%, eop)
Q1 17 1.0 4.7 2,880 7.00
Q2 17 1.2 4.0 3,038 5.75
Q3 17 1.6 4.0 2,937 5.25
Q4 17 1.5 4.1 2,984 4.75
Q1 18 1.7 3.1 2,780 4.50
Q2 18 2.9 3.2 2,931 4.25
Q3 18 2.8 3.2 2,972 4.25
Q4 18 2.6 3.2 3,250 4.25
Q1 19 3.2 3.2 3,175 4.25
Q2 19 3.3 3.4 3,206 4.25
Q3 19 2.5 3.8 3,462 4.25
Q4 19 3.4 3.8 3,277 4.25
Q1 20 1.1 3.9 3,870 3.75
Q2 20 -7.6 3.3 4,100 2.50
Q3 20 -4.2 3.6 3,970 2.50
Q4 20 -1.5 3.4 3,840 2.50
Q1 21 0.3 3.1 3,570 2.50
Q2 21 8.4 3.1 3,500 2.50
Q3 21 4.8 2.7 3,480 2.50
Q4 21 2.4 2.8 3,430 3.00
(f) Forecast.
Source: BBVA Research with DANE and Banco de la República dataColombia Outlook
2Q20
Macroeconomic performance
perspectives: the challenge of taking
care of the health and wellbeing of
colombians
Creating OpportunitiesBBVA Research / Colombia Outlook 2Q20 44 Disclaimer This document has been prepared by BBVA Research Department. It is provided for information purposes only and expresses data, opinions or estimations regarding the date of issue of the report, prepared by BBVA or obtained from or based on sources we consider to be reliable, and have not been independently verified by BBVA. Therefore, BBVA offers no warranty, either express or implicit, regarding its accuracy, integrity or correctness. Any estimations this document may contain have been undertaken according to generally accepted methodologies and should be considered as forecasts or projections. Results obtained in the past, either positive or negative, are no guarantee of future performance. This document and its contents are subject to changes without prior notice depending on variables such as the economic context or market fluctuations. BBVA is not responsible for updating these contents or for giving notice of such changes. BBVA accepts no liability for any loss, direct or indirect, that may result from the use of this document or its contents. This document and its contents do not constitute an offer, invitation or solicitation to purchase, divest or enter into any interest in financial assets or instruments. Neither shall this document nor its contents form the basis of any contract, commitment or decision of any kind. With regard to investment in financial assets related to economic variables this document may cover, readers should be aware that under no circumstances should they base their investment decisions on the information contained in this document. Those persons or entities offering investment products to these potential investors are legally required to provide the information needed for them to take an appropriate investment decision. The content of this document is protected by intellectual property laws. Reproduction, transformation, distribution, public communication, making available, extraction, reuse, forwarding or use of any nature by any means or process is prohibited, except in cases where it is legally permitted or expressly authorized by BBVA. FOR FURTHER INFORMATION, PLEASE CONTACT: BBVA Research Colombia, Carrera 9 No 72 — 2 1, Piso 11 Bogotá, (Colombia) Tel.:+57 346 16 00 ext 11448 - bbvaresearch@bbva.com / www.bbvaresearch.com
BBVA Research / Colombia Outlook 2Q20 45 This report has been produced by: Chief Economist Juana Patricia Téllez juana.tellez@bbva.com María Paula Castañeda Mauricio Hernández María Claudia Llanes Alejandro Reyes Paulo Mauricio Sánchez mariapaula.castaneda@bbva.com mauricio.hernandez@bbva.com maria.llanes@bbva.com alejandro.reyes.gonzalez@bbva.com Paulomauricio.sanchez@bbva.com Student Intern Student Intern Cristian Guillermo Benavides Laura Rocío Rodríguez cristhianguillermo.benavides@bbva.com laurarocio.rodriguez@bbva.com FOR FURTHER INFORMATION, PLEASE CONTACT: BBVA Research Colombia, Carrera 9 No 72 — 2 1, Piso 11 Bogotá, (Colombia) Tel.:+57 346 16 00 ext 11448 - bbvaresearch@bbva.com / www.bbvaresearch.com
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