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Colombia entered a recession for the first time since 1999 due to the paralysis caused by the COVID-19 pandemic, after registering a contraction of its Gross Domestic Product (GDP) for the second consecutive quarter.
The fourth economy in Latin America sank 9% in the third quarter compared to the same period of 2019, although the collapse was less than the -15.8% registered between April and June, DANE noted)
Last year GDP expanded 3.5% between July and September, but positive projections for 2020 were buried with the detection of the first COVID-19 case in March and the containment measures that followed to prevent the spread of the coronavirus.
The sectors of commerce, transport, accommodation and food services (-20.1%), construction (-26.2%) and exploitation of mines and quarries (-19.1%), marked the fall of the economy this quarter.
Agriculture, livestock, hunting, forestry and fishing (1.5%), as well as financial and insurance activities (1.5%) and real estate (1.8%), were the only ones with positive results in this period .
Although the director of DANE, Juan Daniel Oviedo, avoided talking about recession, the current collapse of the economy has not been experienced since 1999, when the GDP contracted 4.5% due to an excessive indebtedness of both the public and private sectors and a mortgage crisis.
For analyst Alejandro Useche, professor at the management school of the Universidad de El Rosario in Bogotá, the outlook is “extremely serious.”
“It is the second time in the economic history of Colombia” that a recession occurs And although “we are already seeing signs of recovery, they are not enough for us to spend the year with positive GDP growth,” Useche told AFP.
“Bottom was reached”
Colombia suffered the slowdown in activity as a result of the restrictions ordered by the government, which have been easing after eight months of health emergency.
Although the economy is gradually recovering, in the accumulated period between January and September, GDP fell 8.1%, compared to the same period in 2019, according to DANE.
Pressured by the economic debacle, the conservative president Iván Duque opted for a policy based on self-care, the mandatory use of masks and the gradual opening of all sectors, despite the fact that infections and deaths from COVID-19 do not subside.
With 50 million inhabitants, Colombia is the fifth country in the region with the highest number of deaths from coronavirus since the beginning of the pandemic, with more than 34,200, and the third in infections, with more than 1.2 million cases.
But Professor Useche believes that the worst is over.
“Although we are going through a very complex situation, there are already signs of recovery in trade, production, and employment, which although they are not yet at levels like those prior to the crisis, I personally consider that the bottom has already been reached,” he said.
Duque claims to have “allocated resources close to 11% of GDP” (about 31,000 million dollars) to attend the emergency, with measures that include lines of credit and subsidies.
Even so, urban unemployment climbed to 18.3% in September, amid a slow economic recovery.
For 2020, the Banco de la República (issuer) forecasts a drop in GDP of around 7.6%, while the International Monetary Fund (IMF) anticipates a drop of 8.2%.
Colombia increased its flexible credit line with the IMF to $ 17.2 billion to alleviate the crisis.
The multilateral body forecast a contraction of 8.1% for the economies of Latin America and the Caribbean in 2020 and warned that it will take at least three years to return to the situation before the pandemic.
And although there is optimism about the development of vaccines against covid-19 “we are far from returning to normality,” Useche concluded.
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