Irony and contradiction in current politics
Less than 30 days before the first round of the presidential election, some apparent contradictions could cloud our judgement of current Colombian politics. First, Vargas-Lleras seems to be destined to attracting less than 10% of likely voters, in spite of having close to 40% of professional politicians and congressmen allegedly working for him. For whatever reason, polls resist to give Vargas-Lleras the political credentials to lead in the presidential race. However, it is a fact that president Santos, big money, the mainstream media and many congressmen will do the impossible to make him president of Colombia. The second contradiction is that Petro claims that every time he increases in favorability, he carries with his success a similar increase for Duque, allegedly originated in the fear of Castro-Chavismo. In an interesting turn of events, the political left would be the best promoter of the political right.
The third contradiction is that separated, liberals and greens will probably be extinct by the second-round era; and yet they decided not to participate in a consulta, with terrible consequences for De la Calle, the liberal candidate and probably fatal consequences for Fajardo, the green one. The irony is that Petro now claims that he represents true liberalism. The fourth contradiction, and the result of a headless left, is that the center-left Santos government, whose main goal was peace with FARC, could face an ironic scenario in which Duque and Vargas-Lleras are the final contenders in the second round; both are center-right, and both disbelievers of the peace agreement.
Regarding the latest monetary policy decision taken by the Board of the Central Bank on their last meeting, we analyze how is it that the Board ponders economic activity and inflation. While acknowledging the weak performance of the economic activity, relative to its potential, we also highlight several factors that must be taken into consideration, and that made us somewhat skeptical about this latest rate cut. As such, we study the behavior of outstanding loans, non-performing consumer loans, and non-performing mortgage loans, along with the TES held by foreigners. Finally, we briefly consider how the appreciation of the Colombian peso against the US dollar might affect the mild recovery seen in non-traditional exports. In the end, we believe the cutting-cycle is over, given the real possibility of prices climbing back up, and the boost expected for the rest of the year of the economic activity.
The most recent figures presented by DANE for March 2018 keep reflecting a stronger labor market in that month and, more importantly, one that may be showing the worst part of the economic slowdown may be over. Indeed, the national unemployment rate slightly decreased from 9.7 to 9.4% and employed population kept growing at a low but positive rate in March (0.6%, which amounts to almost 130.000 people). Also, between 2012-2015 the growth rate of formal employment has been well above that observed for informal employment. Although, this positive trend reversed in 2015, currently formal employment is growing very slowly, but at rates well above those observed for informal employment.
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