Andean Group - August 2009 (ISSN 1741-4466)

The economy is labouring. The most obvious sign of this is the fall in imports. In the first six months the import bill came to US$15.57bn, down 17.7% on the first half of 2008.The main reason for the fall was lower imports of cars and car parts, electrical goods and organic chemicals.

Colombia's big suppliers are: the US (25%); China (11.5%); Brazil (8.2%) and Mexico (5.2%).

The country's trade surplus has virtually halved in the first six months of 2009 to US$742m. In the first half of 2008 the surplus came to US$1.3bn.

Business confidence is brittle. The Asociación Nacional de Empresarios do Colombia (Andi) and seven other business associations published their half year survey of the economy in mid-August. They found that industrial output to June was 6.7% down and total sales were down by 5%. Most businesses said that things have begun to improve, but the advent of the freeze on trade with Venezuela may tip the economy back towards recession again.

The big question is what will happen to jobs. In the first half of the year companies tried not to layoff people, but if sales continue to slide, they may be forced to trim payrolls in the second half of 2009.

Inflation: In July consumer prices fell by 0.04% bringing the monthly rate to 3.28%.