VZCZCXYZ0023
RR RUEHWEB

DE RUEHBO #2127 1871250
ZNR UUUUU ZZH
R 061250Z JUL 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 9651
INFO RUEHBR/AMEMBASSY BRASILIA 9015
RUEHCV/AMEMBASSY CARACAS 2404
RUEHPE/AMEMBASSY LIMA 7701
RUEHLP/AMEMBASSY LA PAZ JUL PANAMA 3799

UNCLAS BOGOTA 002127 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ECIN EFIN EIND EINT EINV EMIN CO
SUBJECT: COLOMBIA:  HAS RECESSION ARRIVED? 
 
¶1.  SUMMARY.  The GOC recently released its first quarter 
growth figure, negative 0.06 percent, sparking a debate among 
economic cognizanti over whether or not Colombia was in 
recession.  Regardless, the relatively modest downturn was 
viewed as a positive sign, given that most forecasts 
predicted negative growth close to or over 1 percent. 
Despite the crisis, the mining, financial services and 
construction sectors demonstrated growth in the first 
quarter, causing some to opine that Colombia may have 
survived the worst of the crisis.  Time will tell if the 
Colombian economy has bottomed out, but the recent growth 
figure is definitely an unexpected and welcome surprise.  END 
SUMMARY. 
 
Recent Growth Statistics Better Than Expected 
--------------------------------------------- 
 
¶2.  On June 25 the Colombian Statistics Department (DANE) 
published the 2009 first quarter growth figure: negative 0.06 
percent.  Both the GOC and private analysts are publicly 
interpreting this figure in different ways, debating if 
Colombia is now in a recession.  (Note:  While Colombia has 
had two consecutive trimester contractions of GDP and thus 
technically in recession, this quarter's GDP growth is 
nominally higher than the same 2008 period, leading some -- 
including Finance Minister Zuluaga -- to say that Colombia 
has not yet entered recession.  End Note.) 
 
¶3.  Despite the debate, most agree that the statistic is a 
positive sign, given that most forecasts predicted negative 
growth close to or over 1 percent.  Luis Carlos Villegas, 
president of the Colombian Industrial Association (ANDI), 
told us the figures indicate that 2009 growth will not be as 
negative as expected and that "we can hopefully soon expect 
the economy to start its recovery."  Other local experts 
note, however, that growth is just one factor of a recovery, 
highlighting that unemployment -- presently at 11.7 percent 
-- continues to worsen.  The Director of Fedesarrollo Roberto 
Steiner said that while the growth figures offers a positive 
signal for the remainder of 2009, continued high unemployment 
remains a more serious concern. 
 
Specific Sectors Carrying The Slack 
------------------------------------ 
 
¶4.  Carlos Rojas, Vice-President of Colombia's Finance 
Association (ANIF), highlighted the positive performance of 
certain sectors as motors of the surprisingly positive 
results.  While manufacturing continues to sputter (-7.9 
percent), mining, financial services, and construction grew 
during the first quarter at rates of 11, 5 and 4 percent 
respectively.  Rojas opined that Colombia is definitely in a 
recession, but that continued growth of specific sectors 
demonstrates "definitive symptoms of survival." 
 
Comment:  Too Early To Tell, But Room For Optimism 
--------------------------------------------- ----- 
 
¶5.  The most recent figures demonstrate that Colombia is 
better positioned than many of its neighbors such as Chile 
(-2.1 percent) and Brazil (-1.8 percent).  Analysts are 
beginning to upgrade their 2009 growth projections with the 
hope that recent figures and GOC efforts to strengthen the 
economy (i.e. expanding public investment, interest rate 
cuts, lifting of restrictions on foreign investment) will 
restore confidence.  While it is too early to tell, the 
recent figures do indicate that, regardless over one's 
definition of "recession", Colombia might be on its way to 
recovery from the worst of the crisis, and is doing so sooner 
than anyone had anticipated. 
Brownfield