Various Recent Economic Issues in Colombia.

Regarding Exported Coffee

For the month of may, the National Federation of Coffee Growers reports total exports of 911.634 60 kilogram bags, of which 821.949 were green coffee (90%) and 89.685 were processed coffee (10%). The recommendation is that the country should shift from exporting green coffee to exporting processed coffee, either from its origin in Colombia or from marketing chains in the main purchasing countries, since processed coffee prices are higher than those of green coffee, and the country is losing out on that added value.

In fact, the price of green coffee in may was U2.88 per pound, while the price of processed coffee (such as roasted coffee) was US4.87, instant coffee US5.75, freezedried coffee US4.05, and extract US4.07. The price that grew the most in a year up to may was soluble coffee, up 77%, while green coffee only increased 43.7%.

This process of replacing green coffee with processed coffee could be carried out gradually within a properly planned schedule.

On the other hand, of the 911.634 bags exported (mainly green coffee), 323.823 (35%) are destined for the United States, followed closely by Belgium with 64.599 (7%), then Germany with 60.797, and Japan with 53.630. With China, the figure is only 26.683 bags, which should be increased through greater promotion, as the market in that country offers significant potential.

Other interesting data on coffee exports include Coffee has few shipping ports, and it is concentrated in one. The main port of shipment is Buenaventura, through which 589.802 bags are shipped, or 65% of the total 911.634 bags. Cartagena follows with 285.105.

In contrast, there are quite a few destination ports for coffee, but not even one stands out. The main port of destination is New York, United States, with 68.095 bags, closely followed by Antwerp, Belgium, with 64.497. Then there is Busan, Korea, with 51.632 bags, Hamburg, Germany, with 39.099 bags, and New Orleans, with 38.105 bags.

Industrial and Trade Performance

According to official sources, Colombian industrial production grew 3% in may, and of the 39 industrial activities, 25 registered increases and 14 decreased. The main increases were in food products (19.5%), chemical products (13.2%), clothing (12.7%), transportation equipment (30.5%), sugar and panela (18.5%), and dairy products (12.1%). The main declines were in vehicle bodies (-26.3%), iron and steel (-16.6%), cocoa and chocolate production (-8.3%), petroleum refining (-7.4%), and precious metals (-12.7%).

Looking at the months since may 2024, which saw a negative -3.5% increase, there are positive and negative ups and downs in industrial production, with the highest increase in march 2.025 (4.9%) and the lowest in june 2.024 (-5%).

Employed personnel in industry grew slightly in may (0.3%), mainly in transportation equipment, dairy products, and meat processing. This employment rate recorded negative monthly results from may 2.024 to january 2.025, with the highest rate in may 2.024 at -1.2%. february, march, and may 2.025 showed positive results, with the highest in march at 0.6%.

The most conclusive observation from the above is that the industry is unpredictable due to ups and downs in production and employment, but march 2.025 was a positive month for both production and employment, and to a lesser extent, but also positive, for both, in may 2.025, june 2.024 was a critical month.

The industrial sector needs to be stabilized and then sustainably grown to achieve a greater contribution to GDP, which requires greater productive efficiency with technological, digital, and robotic innovations.

The other aspect to consider in this section is trade. This sector shows an annual growth of 13.2% in retail trade, with computer equipment (56.5%), motor vehicles (29.8%), household appliances (23.3%), and televisions (26.5%). Others grew less, such as clothing (8.9%), food (6%), cleaning products (12%), and vehicle fuel (1%).

Employment decreased by -0.3% annually in may. Within this sector, permanent staff increased by 1.5%, but temporary staff hired through companies decreased by -7.3%, and apprentices by -6%.

Another interesting commerce data point is e-commerce via internet networks, which grew 19% annually in may, and e-commerce via mail and telephone grew by 11.9%.

This commercial sector is growing at a faster rate than industrial sectors and is one of the key drivers of GDP growth. It is important to maintain the momentum in the trade of vehicles, auto parts, computers, cell phones, and household appliances, which are more volatile than food and clothing.

Regarding labor employment, the results are insufficient for the growth required by the country. Although higher in industry than in commerce, in both cases, this implies that greater dynamics in production and sales would reduce the lack of job creation.

The Financial Sector

In may, according to the entity in charge of financial supervision, the financial sector's profits amounted to 45 billion (b), of which the main ones are pension funds (16 billion), trust funds (14 billion), and banks (4.8 billion).

The loan portfolio totals 725 billion, of which commercial loans (371 billion), consumer loans (204 billion), housing loans (130 billion), and microcredit loans (21 billion).

Total bank deposits reach 750 billion, of which CDs account for 334 billion, savings accounts for 323 billion, and check accounts for 74 billion.

Resources managed by pension funds reach 483 billion, of which the main ones are moderate, 260 billion, followed by the highest risk funds, 132 billion. Voluntary pension funds hold 34 billion, and severance funds 29 billion. Members of these funds are 19.2 million in the former, 926.989 in the voluntary pension , and 11.3 million in the latter. However, active members are only a fraction; in the case of pension funds, they are 7.7 million. Retires in these pension funds total 372.401.

On the other hand, Colpensiones, unlike the pension funds, is a public pension fund and, as of may, has 7.3 billion in resources and 7 million members, of which 2.9 million are active contributors. Colpensiones pensioners total 1.8 million.

From all the above, the profits of pension funds are higher than those of banks, and the greater share of the moderate fund within them stands out.

Commercial and consumer loans stand out in the portfolio, with a lower share of housing and, especially, microcredit, suggesting that they are not a preferred banking target.

CDs are the main component of deposits and outnumber savings. Checking accounts are lower.

The number of active contributors in both private and public pension funds is significantly lower than the total number of registered members because the latter includes those who have stopped contributing. The number of pensioners is obviously lower in the private pension fund than in Colpensiones. In voluntary pensions, the amount in this fund is much lower than the levels of moderate and higher risk private funds, and the number of members is less than one million. This shows that access is lower compared to the amounts of CDT and voluntary savings, which are also much higher, even though the returns on voluntary pension funds are not very different from those of CDT and they have immediate liquidity.

Some aspects regarding pension funds will change if the pension reform is declared fully or partially enforceable by the Constitutional Court, a requirement that must be met after approval by Congress. However, the total amount currently held in moderate and higher risk funds and in the other funds will remain where they are, under the control of each member, and will continue to be managed by their usual administrators.