Cablegate: Colombia: Analysts and Officials Revise Upwards

VZCZCXYZ0000
PP RUEHWEB

DE RUEHBO #2951 2581707
ZNR UUUUU ZZH
P 151707Z SEP 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC PRIORITY 0633
INFO RUEHBR/AMEMBASSY BRASILIA PRIORITY 9147
RUEHCV/AMEMBASSY CARACAS PRIORITY 2897
RUEHLP/AMEMBASSY LA PAZ SEP 0260
RUEHPE/AMEMBASSY LIMA PRIORITY 0073
RUEHZP/AMEMBASSY PANAMA PRIORITY 4337
RUEHQT/AMEMBASSY QUITO PRIORITY 0070
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS BOGOTA 002951

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN PGOV CO
SUBJECT: COLOMBIA: ANALYSTS AND OFFICIALS REVISE UPWARDS
GDP GROWTH FOR 2009

1. (SBU) Summary. Finance Vice Minister Natalia Salazar
told EconOffs on September 9 that the GOC expects 2009 GDP
growth rate to be positive at around 0.5 percent, due
primarily to an increase in public infrastructure projects.
This complements Colombian analysts' reports which, as of
September, predict positive GDP growth rates from 0.1 to 0.4
percent. International banks, such as JP Morgan, Goldman
Sachs, Morgan Stanley and Citigroup, are more conservative
with forecasts ranging from negative 0.9 percent to negative
0.1 percent. End Summary.

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Pessimism Waning
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2. (U) Initial GDP forecasts for Colombia for 2009 were
pegged at 5 percent back in mid-2008, but have since been
revised downward to zero percent, with more conservative
estimates in the red. Colombia technically entered its
recession when 2008's fourth quarter and 2009's first quarter
growth rates were negative 0.8 and 0.6 percent, respectively,
as a result of falling international demand for exports, a
decline in investment, and weak domestic consumption.
Finance Vice Minister Salazar told us she expects positive
GDP growth in 2009, perhaps as high as 0.5 percent, largely
because of the number of public infrastructure projects
underway.

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Humming a New Tune
------------------

3. (U) Government officials and Colombian analysts are now
changing their tunes due to a variety of factors: decreasing
inflation, low interest rates, better than expected global
economic conditions, and most importantly a 42 percent
increase in public infrastructure projects. Complementing
these factors is the dramatic shift in consumer confidence.
Fedesarrollo, a private think tank that monitors consumer
confidence, revealed a sharp increase in the Colombian
Confidence Index from negative 11.7 in April 2009 to a
positive 8.5 in August. According to a September Gallup
Poll, 42 percent believed the principle problem in Colombia
is the economy, down from 57 percent in July. An increasing
number of those polled are more positive about the economy,
unemployment, and the cost of living.

4. (U) National Association of Financial Institutions
President Sergio Clavijo notes that second quarter GDP
figures will point the way for 2009. At the moment, he sees
zero percent growth for 2009. International banks are more
conservative, and predict overall negative economic growth
for the year. Local analysts, however, predict GDP to hold
at negative 0.6 for the second semester and are optimistic
that third and fourth quarter results will be in the black.
Brownfield

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