Notes on Recent Colombian Economy.

Monetary Poverty

The results for the year 2.023 of monetary poverty were released yesterday (wednesday 17) by the official source. In effect, there are two measurements with a monthly value, one is the extreme monetary poverty per capita, which includes the population with an income less than $218.846, which is the extreme poverty line, and the other is the per capita monetary poverty, which is the population with an income less than $435.375 which is the monetary poverty line.

The result for 2.023 shows that extreme monetary poverty was 11.4% of the country's population, that is, 5.8 million inhabitants, and monetary poverty was 33% of the Colombian population, equivalent to 16.7 million people.

The previous records are lower than those of 2.022 when they reached 13.8% and 36.6% for extreme monetary poverty and for monetary poverty respectively. With the declines observed in 2.023, 1.1 million people emerged from extreme monetary poverty and 1.6 million people emerged from monetary poverty.

In the measure of income inequality, which is the Gini coefficient, the result is 0.546 for that year 2.023, slightly lower than that of 0.556 for the year 2.022.

However, as is known in the countries of Europe and the United States, all these indicators mentioned above are different, they are lower in monetary poverty and lower in inequality since in poverty they are between 12% and 25% and in inequality between 0.20 and 0.40 in the Gini coefficient according to International Organizations. In Latin American countries, almost all of them are inferior to Colombia, except in some Central American countries, Bolivia, Venezuela and Haiti.

According to analysts and think tanks, for Colombia to make significant progress in those indicators, the country must have GDP growth of around 5% for several years, as well as unemployment rates of 7% (with greater commitment from the private sector as well) which is the average for Latin America without talking about the levels of 3% and 4% in some countries in Europe and North America. In this, Colombia is lagging with levels of 1% to 3% in GDP estimated for the coming years and with expected unemployment rates above 10%.

Also, for income inequality, international organizations propose, in addition to the previous observations on GDP and unemployment, fiscal reforms where the taxation of individuals is stronger than that of companies, as is the case in Europe and North America and not like Colombia has it with an emphasis on companies. For this change, they propose raising the income tax rate scales for large capital incomes and high labor incomes and lowering taxes on companies.

In this way, with high rates of income tax on individuals, the collection could be increased to then redistribute income with spending on social investment and thus the Gini coefficient would drop significantly compared before and after taxes, different from what It currently happens that from one state to another this coefficient in Colombia does not change, while in the aforementioned countries in Europe and North America the reduction in the Gini after income taxes is significant.

In Colombia, the last tax reform contemplated, as appears in its explanatory statement, only a slight impact on the reduction of inequality and the largest collection, such as 20 billion annually, originated mainly in taxation of companies. For the reforms that are carried out in the next 10 years, the pending task is, as mentioned before, taxation of natural persons as a source of greater revenues with a significant impact on the reduction of the Gini.

Manufacturing Industry

In the recent official information for the month of may on industrial production presented by the official source, it is mentioned that the total manufacturing industry has an annual drop of -3.6%. The internal sectors that present the greatest declines are Manufacturing of motor vehicles with -41.5%, Manufacturing of furniture -18.7%, manufacturing of food products -8.5%, leather and its products -8.5%, manufacturing of clothing -7.9%. These were partially offset by increases in metallurgical products with 22%, appliances and electrical equipment 7.4%.

With the performance of the industry falling in may and with trade equally falling, we will have to wait to see how other sectors that make up the ISE monthly economic monitoring indicator behave in this month of may, which is calculated by the official source and which anticipates the possible result of the GDP, taking into account that for the previous month april had grown according to the result of the ISE, 5.5%.

Accommodation in Hotel Establishments

On the topic of formal accommodation in hotel and tourism establishments, the official source of information presents the following results for the month of May, which are statistical inputs for the formulation of policies on sectors such as this one of relevance and promotion for the country.

This entity classifies for the issue of accommodation the geographical division of the country as follows: Bogotá, Cartagena, Central Region (Boyacá, Cundinamarca, Huila, Tolima), Caribbean Coast Region (Atlantic, Cesar, La Guajira and Magdalena), Axis Region Coffee grower (Caldas, Quindío and Risaralda), Antioquia, San Andrés and Providencia, Pacific Region (Valle del Cauca, Cauca, Nariño and Chocó). Santanderes Region (Santander and Norte de Santander), Llanos Orinoquia Region (Meta, Casanare, Arauca and Vichada), Morrosquillo and Sabana Gulf Region (Bolívar, Córdoba and Sucre), Amazon Region (Amazon, Caquetá, Putumayo, Guaviare and Vaupés).

The previous division is made to highlight the pertinent information of cities such as Bogotá and Cartagena and the departments of Antioquia and San Andrés and other regions, all as tourist or national business centers.

The information presented shows an annual variation for the national total and also for each of the aforementioned geographic divisions in terms of real income, employed personnel and real salaries.

In fact, comparing the month of May with the same month of the previous year for the national total, real income from accommodation activity fell -4%, employed personnel fell -0.8% but real salaries rose 1.7%. In Bogotá, Cartagena and Antioquia, which are the main contributors to the national variation, real income records fall -4.9%, -5.4% and -13.8% respectively, partially offset by the Caribbean Coast Region 6.7%, the Eje Cafetero Region 4.4% and San Andrés 10.9%, regions that contribute less to the national variation than the previous ones.

The annual variation mentioned above for May of the national total of -0.8% in employed personnel is explained by Bogotá -0.8%, Caribbean Coast Region -3.5%, San Andrés -4.5% and Llanos and Orinoquia Region -9.9%, partially compensated by Cartagena 2%, Eje Cafetero Region 2.8% and Pacific Region 4%.

On the other hand, they also measure the occupancy of tourist accommodation establishments from the point of view of travel reasons such as leisure (vacation break), business, conventions and others.

In this, for the national total, first the occupancy percentage for the month of May was 46.6% compared to 48.4% in May of the previous year and for reasons of requesting accommodation, requests are made for leisure (which is vacation) or for business with 25.8% and 17.2% respectively, compared to 25.8% and 18.4% the previous year. Likewise, on both dates, leisure stands out as a reason.

But in more detail the occupancy percentage for Bogotá is 57.6%, Cartagena 59.8%, San Andrés 54.3%, Amazonia Region 49%, Caribbean Coast Region 48.8% and Antioquia 48.9%. Other regions registered less occupancy such as the Central Region 29.9%, Eje Cafetero Region 36.8% and Santanderes Region 33.3%. It is particularly notable that in Bogotá accommodations for leisure are 17.5% and for business are higher 32.2% while the opposite in Cartagena is 46% for leisure and 11.6% for business. In San Andrés it is 54.2% for leisure and 0.1% for business, Antioquia 25.9% leisure and 18.7% business and the Pacific Region 13.8% leisure and 18.2% business. Mainly in Bogotá, business predominates over leisure as the reason for accommodation requests.

Additionally, they provide information on the annual variation of accommodation rates by region. For the national total as of may, the variation was 5.7% for single accommodation and 2.2% for double accommodation. Those that rose the most were the Eje Cafetero Region 10.4% in single and 14.3% in double, the Caribbean Coast Region 10% in single and 9.9% in double and the Santanderes Region 7.5% single and 10.5% double. On the contrary, those that grew the least are Bogotá 1.9% single and -1.9% double, San Andrés 0.3% single and -8.4% double and Cartagena 5.2% single and 0.4% double.

In the above there are several considerations to make. On the one hand, the reduction in the annual activity of hotel accommodation reflected in lower occupancy and jobs in a month like may that is not a high season but that sends a warning signal about the promotion of tourism and business activities that require a greater emphasis that provides more development of the sector. On the other hand, the presence of a direct relationship between the low occupancy of the Coffee Region and the Santanderes Region and their higher variations in rates in those regions, which contrasts with the higher occupancy of Bogotá, San Andrés and Cartagena and their low variations in rates, which explains that due to the high rates, occupancy is lower in that area.