Credit Crunch Hits Colombia
News from Colombia |
on: Saturday, 28 February 2009
Economic indicators suggest that Colombia's economy is being hit hard by the worldwide economic downturn with unemployment increasingly sharply, industrial output down and a 10% fall in retail sales in the country. The crunch is likely to hit Colombia's poor majority hardest in a country that already suffers from the second highest levels of economic inequality in Latin America.
Government figures released in late February gave the official unemployment rate as 14% - the highest in the region – though trade unions claimed that the true figure is substantially higher. It is thought that at least three million Colombians are currently looking for work but with at least one large employer – multinational mining company Glencore – recently announcing that they are to leave Colombia, the prospects for the unemployed appear bleak.
Industrial output in the country has seen its sharpest fall in over a decade with several sectors such as tobacco, which saw a 66% downturn in January compared to the same month in 2008, and printing which shrank 59%, experiencing particularly difficult times.
Life for the 60% of Colombians that live in poverty is likely to become harder as central government slashes budgets in key areas in response to the crisis. Education, health and sanitation are due to be cut by 12% and infrastructure projects, including roads and irrigation, are also to be frozen despite the fact that over a million Colombians lack access to safe drinking water.
One area that does not appear to be feeling the squeeze is military expenditure with the Colombian finance minister recently announcing a $1.2 billion dollar purchase of military equipment. The purchase will be financed by the privatisation of the state electricity company Isagen. However, even Colombia's military may begin to feel the pinch as the US cuts back their substantial military aid program as a result of human rights concerns.