Bulltick Revises Up Colombia Growth

BY CHRONICLE STAFF

Following news that Colombia's economy fell by 0.6 percent in the first quarter - better than the 1.3 percent decline expected by most market analysts - Bulltick Capital Markets has revised up its forecast for 2009 growth for the country.

“The performance of the economy from the demand side of the economy during the first quarter of the year came better than we had expected,” Alberto Bernal, head of EM Macroeconomic Strategy at Bulltick Capital Markets, writes in a new analysis. “Specifically, both investment and consumption performed better than we had expected, showing rather mild retrenchments compared to the market's expectations. After seeing this official growth number, after including the latest bettering of terms of trade…and after accounting for the aggressive reduction in interest rates decreed by the Central Bank, we have decided to revise our 2009 growth forecast from an already out of consensus and positive 0.5 percent year-over-year to a positive 1.5 percent year-over-year.”

The Bulltick forecast is by far the most optimistic among market observers. Moody’s Economy.com, for example, yesterday announced that its outlook for Colombia GDP this year is a negative 1.2 percent change. It’s also more bullish than the government’s own figures. Finance Minister Oscar Ivan Zuluaga last week said he expected a 0.5 percent GDP expansion this year.

Bernal believes the second half of the year will be much stronger, driven by investments and growth in sectors like mining and financial services and to a certain extent construction (thanks to public spending). “We expect mining and financial services to continue posting good growth figures this year [and] we think that oil production in Colombia will continue to increase going forward, thanks to the massive levels of investment that the country has seen from multinational oil companies and from [state oil company] Ecopetrol in the past couple of years,” he argues.

Ecopetrol, Colombia’s largest company and the 12^th largest in Latin America on the LBC 500, last year boosted revenues by 52 percent to $15.1 billion as its profits soared 125 percent to $5.2 billion.

Bulltick also predicts that Colombia will be able to see another impressive year in foreign direct investment, despite a fall compared to last year.

”We forecast that the level of foreign direct investment going into the country will prove resilient in 2009 --about 60 percent of the resources are going into energy-related …investments, and many of those investments are related to projects that are multiyear projects,” Bernal points out. “We doubt that FDI will contract by more than 20 percent year-over-year in 2009 -compared to 2008, a year in which FDI surpassed the $10 billion mark.”

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