BY CHRONICLE STAFF
Colombian president Alvaro Uribe will likely run for re-election in a move that will generate a lot of international noise, but actually boost foreign direct investment in the country, according to Alberto Bernal, head of emerging markets research at Bulltick Capital Markets.
And despite widespread predictions of zero or negative growth, Bernal believes Colombia’s economy will end up growing 1 percent this year.
“We doubt that a decision by President Uribe to run again will have an effect on country ratings, and we doubt that the decision will reduce the levels of foreign direct investment into the country,” he wrote in an analysis after a trip to Colombia last week. “On the contrary, we think that the highest probability is that FDI will increase if Uribe runs again, since, in our view, investors have little doubt about the seriousness of Uribe’s speech regarding property rights.”
Some members of the international business community have been explicit in asking the President to run again, including the head of the Spanish Business chamber, Bernal points out. Uribe’s re-election “is good news,” said Javier Gómez-Navarro, president of Spain’s Cámaras de Comercio, after meeting Uribe during his visit to Spain last month.
More importantly, though, Uribe continues to enjoy sky-high approval ratings and would easily win a referendum on his re-election. Uribe enjoys from 68 percent approval rate, a full 59 percent of the voting population will vote in the referendum and of those that will vote 84 percent wants President Uribe to run again, Bernal points out.
Uribe’s mandate ends in August 2010 and presidential elections are scheduled for May. According to the constitution, Uribe can’t run for a third term. He already ran for re-election and won in 2006. To run for re-election he would need to hold a referendum first, but would likely win that. However, such a move would likely be compared to the re-election actions in other Andean nations like Venezuela, Bolivia and Ecuador, Bernal predicts. Meanwhile, many local business leaders, including Exito CEO Gonzalo Restrepo have also opposed re-election.
“We believe that Colombian law should apply,” Luis Carlos Villegas, president of the powerful business organization ANDI told Latin Business Chronicle recently. “We don’t deny that Uribe has been one of the best presidents in Colombia [but] there are dozens of people [that also qualify to be president].”
The International Monetary Fund predicts that Colombia’s economy will see zero growth this year, but Bernal expects the economy to do better. “We remain significantly more positive than the market consensus regarding the expected rate of growth of the Colombian economy during 2009,” he says. “We still have a high degree of confidence in our forecast that the Colombian economy will avoid showing a negative growth performance in 2009 –our call remains that the Colombian economy will grow 1 percent year-over-year in 2009.”
The reasons? The rate of growth of public sector infrastructure investment during 2009 will accelerate very significantly in the next few quarters, and the rate of growth of domestic consumption is expected to remain positive during 2009, despite increased unemployment, and despite the latest deterioration seen in consumer confidence numbers.
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