Boston, MA -- (ReleaseWire) -- 11/08/2012 -- Colombia's economic backdrop over the last 12 months has seen strong credit growth and lower unemployment driving consumption. However, we believe private consumption may have peaked in H211, and growth is now moderating owing to a slowdown in credit growth. That said, we still forecast the Colombian economy will perform strongly at a 4.7% real GDP growth rate this year.
Indeed, the major accelerator for Colombian real GDP growth will continue to be private consumption; we expect this to continue over the next few years, boosted by strong credit expansion and low unemployment. In addition, Colombia's large proportion of low-income consumers means the country has one of the lowest per-capita food consumption rates within the region, leaving much room for growth.
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Headline Industry Data (in local currency):
- 2012 per capita food consumption = +13%; forecast to 2016 = +38.1%.
- 2012 alcoholic drink sales = +6%; forecast to 2016 = +20.3%.
- 2012 soft drink sales = +8.1%; forecast to 2016 = +27.4%.
- 2012 mass grocery retail sales = +15.5%; forecast to 2016 = +47.7%.
Key Company Trends
Colombia's Coffee Harvest Could Disappoint: After an optimistic coffee industry forecast, UK investment bank Barclays Capital has recently cautioned that the 2012 Colombian coffee harvest may still drop to its lowest for over 30 years, according to reports in Agrimoney. A year-on-year (y-o-y) 11% rise in April 2012 generated the Fedacafe estimate, but lack of sunlight is still stunting flowering. Four years of heavy rainfall, plus delays in fruiting due to replanting, caused a three-decade low of 7.8mn bags in 2011.
Walmart May Yet Enter Colombia: A recent report by Bloomberg has suggested that Walmart's attempts to acquire Carrefour's assets in Latin America have slowed due to the French retailer devoting its resources to turning around its ailing European operation. Carrefour's portfolio of stores in markets such as Brazil and Colombia must surely be at the heart of any longer-term plan, and indeed, the recent rumours that the firm is close to sealing the acquisition of a supermarket chain in Argentina suggest that this is now recognised by the firm, and means that a sale to Walmart would be both unwise, and unlikely. With Walmart's interest in Colombia unlikely to be quelled, the firm could instead turn its attention to the clutch of local retailers operating in the market.
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