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Colombia Economy Faces ‘Difficult’ 2009, Roubini Says

April 8 (Bloomberg) -- Colombia has been among the nations hardest hit in Latin America this year and its prospects may not improve as exports fall, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“It’s going to be a difficult year,” Roubini said in an interview in New York. “Colombia has been hit by the financial and economic crisis more than people expected.”

Colombia “looked in reasonably good shape” coming into the crisis, he said. Growth slumped to 2.5 percent in 2008, hurt by a 22 percent plunge in exports, from 7.5 percent in 2007, the fastest pace in three decades. Colombia’s central bank said April 3 that the economy was weakening more than it expected.

Colombia has been hurt by “trade shocks, the fall of exports to the region and outside and massive reductions from remittances from workers in Spain, who lost their jobs in construction,” Roubini said.

Economic growth slowed last year after central bank policy makers raised interest rates in a bid to stem inflation. With borrowing costs at a seven-year high, the global financial crisis spread to Colombia, stifling exports and prompting consumers to scale back purchases.

The central bank lowered its benchmark rate by a full percentage point last month to revive growth in South America’s fourth-biggest economy. Standard & Poor’s said on March 28 that the economy will probably grow 1 percent in 2009.

Weak Peso

The peso has plunged against the dollar on concerns about the economic slowdown. The currency pared its yearly drop last week on speculation the country would follow Mexico in tapping a credit line from the International Monetary Fund.

Colombia’s government isn’t considering the use of an IMF credit line “at this time” to cover its financing needs, the Finance Ministry said in a statement today. The announcement comes after Mexico said April 1 it will seek a $47 billion credit line to shore up foreign reserves.

The peso has declined 6.4 percent in 2009, the worst performance among the six most-traded Latin American currencies tracked by Bloomberg.

Chile, Brazil and Uruguay are the countries that may perform better in the region in the medium term, Roubini said.

“Those central banks which were more conservative and hawkish on inflation, like Chile and Brazil, can ease more aggressively,” Roubini said.

By BillBigD on Apr 8, 2009, 15:51 in Friendly Talkzone.

Ken says on Apr 8, 2009, 17:24:

Like I said in a previous post, before this began to unwind. Commodity economy. Last to be hit, usually last to recover, and hit hard. It´s ALWAYS the same in every recession, why should this be any different?

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somedumbguy says on Apr 8, 2009, 17:27:

Im pretty stupid, but hasn't the peso been gaining ground the last week?

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somedumbguy says on Apr 8, 2009, 17:39:

Brians....Do you think the dollar, with the trillions of american debt, is actually going to make a run? I would think it would be the other way around.

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podborski says on Apr 10, 2009, 11:44:

Ken I have to think you're right, and I know the most dangerous words in investing are ´this time it's different' BUT...I just think China and India might stop buying BMWs but not soy, wheat, copper, potash or whatever the hell other commodities they need?

So maybe there's hope for commodity producers?

I hope so, as after having been out of stocks for too many years I started buying Potash and Agrium (TSX) and even an oil ETF (HOU).

Normally I'm way too early and get killed for a year before things start to go my way. So expect a big plunge in commodites for the next year : )

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BillBigD says on Apr 10, 2009, 20:15:

podborski- You have seen the lastest contract prices on Potash I hope?

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podborski says on Apr 11, 2009, 11:37:

hell no Bill...I haven´t got time for that. I was hoping mr market already had taken that into account? If not, I'll be riding the position for a while I guess. But I am just dipping my toe in for now, it won't kill me.

Hey loid! yeah, HOU.To...it's probably not the best way to play it, but there are some restrictions on this account I have, so I can´t play futures for example. I can buy it in Cad$, so that helps a lot too.

I don´t think we'll see $200 again loid, or even $100...but like you say, I am happy with some very small part of that.

There's probably some ugly downside to HOU that I am unaware of, but so far so good.

I never bought into the oil is going up forever mantra, and i also don't think we are running out any time soon, but you have to think we're a lot closer to the bottom than the top here. I'm pretty sure in 5 years we'll have seen oil over $100 again...maybe lots higher?

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somedumbguy says on Apr 11, 2009, 13:31:

Loid...the downturn in the world economy will keep the demand for oil low for the remainder of the year...there are not any imminent wars...we should see some increase in demand next year....

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bickerss says on Apr 12, 2009, 16:54:

http://www.simmonsco-intl.com/files/Pioneer Oil Producers Society.pdf

interesting read

Investment Strategy - buying when others are crying!! Offloading when others are gloating!!!

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podborski says on May 6, 2009, 16:05:

well so far so good...did you buy any HOU loid? How about POT or AGU? My best has been CBQ, which is a Canadian BRIC etf. I think that should be a long term keeper, if I can keep myself from the short term trading urge..

I'm getting killed on the loonie rise...I saw it coming and have been trying to hedge it for months, but my damn bank never sent me the papers I needed to set up a forward contract.

My brain tells me this is all too far too fast...but my gut tells me people want to buy anything and everything right now. I'm going to ride it a bit longer.

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podborski says on May 19, 2009, 16:52:

ok so I just have to gloat a bit here...anybody check out the price of POT, CBQ, HOU lately? I am a guru...: )

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podborski says on May 19, 2009, 16:56:

ok for all you lazy people, POT has gone from around $100 to $132, AGU from $47 to $59, and CBQ from $20 to $23....all on the TSX and in $CDN of course.

By the way, the loonie is going to par, as I feared...buy on dips

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podborski says on May 19, 2009, 16:56:

oh yaeh and HOU from $5 to $7.50

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BillBigD says on May 19, 2009, 18:04:

POT and MOS (NYSE) have done very well. Option returns have been huge. Won't post as people will laugh or not understand. But one must rember the price of the product that they are selling is actually dropping. Ride it until it ends.

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podborski says on May 19, 2009, 18:38:

hey Bill
yeah I really wasn't convinced I was more buying as a hedge against my long USD position. I would actually still be better off if they all crashed.

So I have no idea when to sell, but going to ride it a little bit....

but my brain tells me I am playing the greater fool game right now. Sentiment seems overwhelmingly, irrationally positive though, I'm not going to fight it.

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podborski says on May 19, 2009, 19:23:

hey loid, how are you?

I'm heading to Bogotá next week, you around or in medellin?

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BillBigD says on May 20, 2009, 05:21:

Gringoloid- Look at the price of Potash it is dropping like a rock. But that doesn't mean the stocks will not go up. Remember we talked about this about month and half ago People are willing to assume more risk now.. Market changes almost daily.

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podborski says on May 20, 2009, 12:43:

one of my best friends is also in Bog right now, and I only have a few days.

Besides, I'm not sold on medellin at all...but maybe I'll give it another try next time I get more than a week off.

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podborski says on May 20, 2009, 12:46:

I just held my breath and piled into a lot more of HOU today...I really feel it's crazy, but it just seems like oil wants to go up, mainly because the dollar is going down.

It's the best hedge I have found against a crashing dollar.

I sold my RY (royal bank) and anything else that wasn't commodity related...

I think this is more of a play on the falling dollar than anything else.

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tasco66 says on May 20, 2009, 12:50:

'Colombia saldrá fortalecida de la crisis', afirma Nouriel Roubini en Foro Económico 2009 de PORTAFOLIO

http://www.portafolio.com.co/economia/economiahoy/2009-05-19/ARTICULO-...

The trouble with free elections is, you never know who is going to win (Leonid Brezhnev)

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podborski says on May 20, 2009, 13:18:

my only fear is oil takes a drop and the canadian dollar still keeps going up...not all that likely, but you never know.

Long term I like the oil story though. I think the range is $40 to $140 now, and we're a lot closer to the bottom than the top

But if it gets to $70 USD in the next few weeks I'll probably take profits and hope for another dip to buy in again

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poco says on May 20, 2009, 13:46:

Quote: i take that back, it's almost up a buck. holy moly! so just for today, NOT the total amount of gain in the month i've owned EC
===========================
Ha,, I've become RICH off EC,, damn,, it's been going up about ONE PERCENT everyday for a month !!!! Oh,, that's everyday the market is OPEN,, I need to explain that concept on PBH, nothing goes up when the market is closed.

Anyway,, I decided in,, what? April?,, it's in my comments,, that the best inflation hedge is,, commodities?? (did I spell that right? ,, :) Oil,, copper being my favorites, and PBR being my favorite,, two things going for it,, LOTS of supply and,, MAYBE,,, a government who won’t start printing money,, damn,, where is that TRILLION DOLLAR NOTE ? WoW,,, wasn’t a TRILLION dollar note,, ONE HUNDRED TRILLION DOLLARS !!!

I feel sorry for those who think things might get better,, for most,, no, the time of getting better, for most,, stopped about 25 years ago and is speeding up,, downhill,, right now. Pretty soon,, you'll need an ADVANCED university degree to be a door man at Walmart,, maybe Colombia will fare better?

Colombian Chickens are crowing about the new President of the U.S. who will assure that From each according to their ability to each according to their need.

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podborski says on May 20, 2009, 14:03:

no I'm not brave loid, I just don't have much choice, I was trying to wait and buy in cheaper but waited too long.

I actually think there's a better chance I will lose on this than win, in the short term anyway...but if this does drop I still have about 4 times as much to put in, and only then will I be fully hedged.

So actually, I am panick buying right now, haha, like a lot of others.

I just hope to be able to bail out if it really collapses. I'm watching fairly closely...

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podborski says on May 20, 2009, 14:05:

I like PBR too poco...great long term prospects I think. But I am not buying anything on US exchanges right now, just CDN listed stuff.

I don't want anything in the dollar...it's done for, like you said.

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podborski says on May 20, 2009, 14:53:

nope! haha

I just mean I think the dollar is going to lose a lot of value vs currencies of countries that are managed better, like Canada, (can't believe I am even saying that.)

It won't go to zero I don't think. Still lots of great companies in the USA, and europe is no hell either. I'm a long term optimist on the USA, but this mess is huge and won't be quickly cleaned up.

However I could see myself piling into US stocks in a few years...or maybe after the dollar has fallen another 30%.

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podborski says on May 20, 2009, 15:52:

the problem is, it's pretty much impossible to know what those derivatives represent...they ae basically a bunch of complicated contracts, and I don't think anyone has a good idea of what they all mean, it wouldn't be possible to know.

But I sure don't trust risk management in the big firms, so I'd say there are bound to be a lot of very, very ugly surprises buried in those contracts.

That's why i bailed out of my one bank holding (Royal Bank of Canada, best bank in Canada, so maybe one of the best anywhere).Still they could have all kinds of commercial RE loans that will be under water, or derivatives...so I'll step aside for a while and just stick with commodity plays like my man Jim Rogers says to do

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makopp5 (☼Travelguide writer) says on May 20, 2009, 16:06:

gringoloid

back from miami? want to go to santa fe this puente on a finca?

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makopp5 (☼Travelguide writer) says on May 20, 2009, 16:34:

gl

will be there on saturday afternoon

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