Colombia is the land of contradictions.A cloudless sky can give way to a torrential downpour in a matter of seconds. A major shopping centre, sporting chic international brands, can be located alongside a squalid shantytown, or a desolate desert can give way to a tropical rainforest.
Much of the vast variety in climate, vegetation and fauna is attributed to the country’s rugged geography, where sudden changes in elevation lead to drastic differences in temperature and environmental conditions.
Colombian artists have tunnelled deep into these contradictions by producing works that employ a kaleidoscope of colours, styles and harmonies.
Writers, such as Gabriel Garcia Marquez, used these incongruities to develop a genre of literature labelled Magical Realism, whereby illogical circumstances in mundane settings take on enchanted attributes.
A similar situation is occurring within and without the Colombian economy.
In a global context where commodity prices are diving, the Colombian economy is thriving. Likewise, in a domestic economy that is booming, the population is discontented, thus creating one of the paradoxes of the emerging world.
Like its Latin American neighbours, Colombia’s exports are mainly commodities. Oil and coal represent almost 60 per cent of embarkations.
The next major export product is gold, eclipsing coffee and flowers due to the relentless appreciation of the peso. Yet, unlike its neighbours, China is not a major trade partner.
Although Colombia’s Sino-trade has been growing exponentially, it only represents six per cent of embarkations. Meanwhile, exports to the United States account for 36 per cent of the total. This makes the country less vulnerable to the economic woes in China. At the same time, it benefits from the revival of the United States economy.
Indeed, Colombian exports have been relatively steady, allowing the trade balance to remain in the black.
Despite having the distinguished honour of being the only South American country to have direct access to the two major oceans of the planet, it always neglected its Pacific coast.
A variety of political, geographical, historical and economic reasons reduced the status of the port of Buenaventura to that of a sleepy backwater.
The country’s focus on its Caribbean gateways induced Colombian companies to deepen their commercial relationships with the US, culminating in a free-trade agreement in 2011. This allowed Colombia to expand the range of products that it exports to North America. It has also resulted in a sharp increase in foreign investment.
Capital inflows have been rising steadily, as multinationals and Colombians take advantage of the improvement in the security environment to invest across a wide range of sectors. As a result, the level of economic activity remains steady, expanding 4.2 per cent in 2013.
The Colombian peso has also demonstrated a great deal of resiliency, in comparison to the declines that were witnessed elsewhere in the region and the emerging world.
Yet, despite the sound economic environment, Colombian households are miserable. Consumer confidence at the end of July was an anaemic 27 per cent. Although it was higher than the 20 per cent that was reported in April of the same year, it was almost a third of what was recorded in Peru.
Why the pessimism? There have been a variety of factors. Mounting labour unrest is part of the problem. Not only is inflation on the rise, workers are demanding a bigger share of the economic boom.
Like other countries in the region, the trickle-down from the commodity bonanza has been small in comparison to the bounty that has been enjoyed by the economic and political elite as well as large multinational corporations.
The most visible labour unrest has been in the mining sector, particularly in coastal areas. These incidents resonate deeply with the labour unrest that was the root of the political instability that rocked the country during the latter half of the 20th century.
Most of the public is also disappointed with the ongoing negotiations with the FARC. Rightfully perceived as criminals and thugs, the public wants to give no quarter.
Last of all, the public is dismayed with the deep-seated corruption that plagues the government and the billions that have been siphoned off important public work projects.
Unfortunately, the brunt of the discontent has been directed at President Juan Manuel Santos. Well-intentioned and diligent in his approach, he also had to endure unending political and personal attacks from his predecessor, Alvaro Uribe.
The problem is that President Santos is up for re-election next year, and his approval rating is an abysmal 32 per cent.
In the meantime, Colombia continues to be the bastion of contradictions – a country with a strong economy but a disgruntled population.
Dr Walter T. Molano is a managing partner and the head of research at BCP Securities LLC. Email him at email@example.com.
Source: The Gleaner