Colombia: Economy would fall in January between 4.5 and 7% due to mobility restrictions

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The new measures to restrict mobility, peak and ID, and sectorized quarantines, adopted by the main cities of the country to contain the second wave of Covid-19 infections, already reflect strong impacts on the Colombian economy, especially in sales of the trade and household consumption, which in the long run will also have a negative effect on the performance of the economy.

According to the economists of the Banco de Bogotá, with the current trend of reduction in mobility, the economy could contract in January between 4.5 and 7 percent , a fall greater than the one registered in November 2020 of 3.4 percent.

They emphasize that these measures that local governments have been imposing in the country tend to have a greater impact on service sectors that depend, to a greater extent, on social interaction, like restaurants and commerce .

According to a preliminary analysis by Grupo Bancolombia, while retail sales, during the week of January 8 to 14, showed an annual contraction of 30 percent, that of consumption, so far in January, already marks a 22 percent.

They warn that regions where restrictions on mobility have been stronger have seen a stronger effect on business performance. For example, Antioquia ranks as the region with the largest contraction so far in January, with a negative variation of 26 percent, followed by the West, with a drop of 24 percent.

Regarding the capital of the country, the economists of the Banco de Bogotá maintain in their analysis that quarantines affect about 75 percent of the commercial establishments of the city, causing a great impact.

Likewise, they warn that the impact on employment will be relevant. Although at the beginning of the year unemployment tends to increase due to its seasonal nature, this time this adjustment could be greater.

They said, once again, the mobility information suggests that between 600,000 and one million jobs could be lost in January, due to the social distancing measures that have been implemented in the country.