The industrial sector in Colombia was the engine of the national economy during 1H2016 despite the many challenges that it faced. Although exports could be expected to rise after the Colombian peso lost about 35% of its value in the last 12 months, the reverse has taken place; total Colombian exports decreased by 20% YoY in May 2016. According to data from the National Department of Statistics (DANE), in May alone oil exports plummeted by 45.2%, while coal fell 39.1%, and even coffee dropped by 22.7%. Through the first five months of 2016, exports registered a sharp year-over-year decline of 27.9%, representing a loss of $11.5 billion for Latin America’s fourth largest economy. Meanwhile, the Colombian economy grew by 2.5% overall in 1Q2016, a better than expected performance compared to other countries in the region; the output of Brazil’s economy shrunk by 0.3%, while that of Chile advanced by 2% and Argentina grew by 0.5%. Despite the blows suffered due to falling commodity prices, good performances by the manufacturing, construction, and finance sectors all helped Colombia outperform its neighbors.
The manufacturing industry was the largest contributor to the country’s GDP as it advanced 5.3% in May. The strong manufacturing performance was triggered by astonishing growth in 16 of its 24 sub-sectors.
Downstream oil-related activities increased by 20.6% thanks to the construction of a new refinery in Cartagena, while the beverage segment grew by 16.4%. As many goods and raw materials have to be purchased abroad, the loss in purchasing power of the peso made those products more expensive, hurting local firms. Nevertheless, there are certain companies that have benefited from the peso’s depreciation and are even increasing their exports. In the textile industry, a sector that was protected by the peso devaluation against imports, domestic sales have increased dramatically.