Colombia’s industrial and manufacturing output contracts – 8.5% in July


Colombian manufacturers were among the first to resume operations by Presidential decree as the country continued under quarantine and key sector for the gradual reopening of the economy.

Despite incentives to reopen stalled assembly plants with the coronavirus pandemic, the country’s statistics entity DANE released numbers that show a significant contraction in industrial production for July of – 8.5% instead of a projected – 5.1%. Among the most impacted sectors is car manufacturing with a severe drop of 49%, followed by textile and clothing with 29%. The only departments that managed to sustain numbers in the positive are Boyacá at 10% and Caldas 13%.

As manufacturing faces its worst monthly declines on record, 86% of Colombian business leaders remain pessimistic that August will show improved numbers given that only 14% of merchants and retailers saw an increase in sales. Among their concerns are excessive restrictions that were implemented during quarantine and which continue to restrict access to consumers.

“The index tell us that there can be no reactivation until restrictions in Bogotá, Santander, and other cities are eliminated,” remarked Jaime Cabal, president of the National Federation of Trade and Commerce (Fenalco). Cabal attributes much of the downturn to lost incomes, closed schools and universities for most of the summer months and high cost of credit. Bogotá was the worst-performing city, with industrial production contracting deep in negative territory with – 15%.

While the country showed “sparks of revival” – according to Fenalco – with the slow reopening of authorized businesses in June, 65% of merchants saw their revenues decrease despite a No Tax Day that spurred sales in electronics. Bogotá Mayor Claudia López sharply criticized the decision by the government to host a Día Sin Iva on June 19, referring to it as “COVID Friday.”

However, for the nation’s retailers represented by Fenalco, the elimination of 19% VAT on consumer goods “was very positive, stimulating consumption and positively impacting businesses,” affirms Cabal. One economic sector that has lagged behind in recovering lost revenue are cosmetics and other beauty products registering a 30% drop in sales as make-up has become less of a necessity with the obligatory use of face masks.




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