Economic recession alert: Colombian exports decline adds to the indicators
Amid monthly inflation of 0.43% and an unemployment rate of 10.5% in May, the negative performance of Colombian exports reinforces the poor forecasts for the Indicador de Seguimiento a la Economía (ISE) to be released in the middle of this month.
In May 2023, Colombian exports experienced a 2.8% decrease compared to the same month of the previous year, when the value recorded was US$4,662 million, according to reports provided by the National Administrative Department of Statistics (DANE). The total value of exports in that month was US$4,531.2 million.
| You may be interested in: Workday reduction begins in Colombia: here’s how it works
The drop in the value of exports was mainly due to the decrease in foreign sales of fuels and extractive industry products, which fell by 9.1%. These products generated revenues of US$2,251.3 million in May 2023, compared to the US$2,475.5 million recorded in May 2022.
According to DANE figures, in May 2023, the group of fuels and extractive industry products accounted for 49.7% of the total value of exports. It was followed by the manufacturing sector with 20.9%, agriculture, food and beverages with 22.0%, and other sectors with 7.3%.
It is relevant to highlight that during May 2023 the country exported 18.2 million barrels of crude oil, which represented a growth of 31.1% compared to the same month of the previous year, when 13.9 million barrels of crude oil were sold to the world.
Another sector that contributed to the deceleration of Colombian exports was Agriculture, food and beverages, with a decrease of 3.1% in May 2023. This sector invoiced US$998.1 million, compared to the US$1,030.5 million recorded in the same month of the previous year.
In contrast to the aforementioned sectors, Manufacturing exports experienced a 6.3% growth in May 2023. They went from US$893.1 million in May 2022 to US$949.2 million in the same month of 2023.
Colombian exports in 2023: Mining and food exports decreased so far this year
Looking at the period between January and May 2023, Colombian exports registered a 10.1% decrease compared to the same period of the previous year. During these five months of 2023, the total value of exports was US$20,600.7 million. This is mainly due to the contraction in two groups of goods: Fuels and products of extractive industries and Agricultural products, food and beverages, which fell 14%.
In the same period, the Fuels and products of extractive industries group accounted for US$10,738.9 million in international trade, down 14.0% compared to the same period in 2022.
| You may be interested in: Withholding tax 2023: What is it and how is it calculated?
This decrease is mainly due to the drop in external sales of petroleum, petroleum products and related products, which experienced a decrease of 28.3%.
In the case of agricultural products, food and beverages, there was also a downward trend of 14% compared to the same period in 2022. Sales in this sector reached US$4,343.3 million. This decrease is mainly attributed to the decrease in sales of decaffeinated and non-caffeinated unroasted coffee, which experienced a 27% drop.
On the other hand, exports of Manufactures during the period from January to May 2023 were US$4,141.3 million, which represents a decrease of 1.1% compared to the same period of the previous year. This behavior is mainly due to the reduction in exports of chemicals and related products, which experienced a loss of 10.7%.
Bleak outlook despite surpassing pre-pandemic levels
The value of Colombian exports in May 2023 represents a 20.9% increase compared to those recorded in 2019, pre-pandemic. The group of Agricultural products, food and beverages showed the highest growth with an upturn of 43.6%.
Among the products most exported by Colombia were cut flowers and foliage, unroasted coffee and bananas. In the case of Fuels, oil and its derivatives continue to represent a significant part of exports, with a value of US$1,225 million, equivalent to almost one third of the total.
The United States remains the main destination for Colombian exports, representing 27.4% of the total. It is followed by Panama (8.4%), the Netherlands (6.1%), Mexico (3.8%), Brazil (3.7%), China (3.7%) and Ecuador (3.4%). Of these countries, exports increased only to Panama.
In summary, Colombian exports performance in May 2023 showed an overall decrease of 2.8% compared to the same month of the previous year. Sales of fuels and products of the extractive industries and agricultural products, food and beverages experienced declines, while exports of manufactured goods and other sectors showed growth.
Although the January to May 2023 period saw a 10.1% decrease in exports in general, there was growth in the agricultural products, food and beverages sector compared to the same period in 2022. The United States remains the main destination for Colombian exports.
| Read more: Is the de-dollarization of the world economy on its way? Several facts suggest so