Losses Soar as Unrest Hits Colombian Ports, Mines and Refineries
(Bloomberg) -- A month of unrest across Colombia is threatening to derail the fragile economic recovery as supply chains are hit by blockades of ports, highways, mines and refineries.
The nation’s biggest Pacific port and one of its two main coal mines have been paralyzed by protests, its biggest oil refinery can’t function normally, and roadblocks have cut off some of the richest farmland, causing food prices to soar.
The annual inflation rate is on course for its biggest jump since 1998 this month, according to analysts surveyed by Bloomberg, as the blockades cause shortages. The unrest is costing the economy about 480 billion pesos ($129 million) per day, Finance Minister Jose Manuel Restrepo said, with the government estimating the cumulative damage over the last month at $2.8 billion.
The demonstrations flared up on April 28 to oppose a government plan to raise taxes, but have morphed into a mass protest movement with a range of other grievances, including police brutality, corruption and inequality. Daily clashes between demonstrators and security forces have left more than 40 dead, according to the national human rights ombudsman, and arson attacks have damaged transport systems and government buildings.
Talks between the government and protests leaders have so far gone nowhere. President Ivan Duque is demanding that demonstrators lift the blockades, while the protesters want to see police officers who have killed civilians prosecuted.
Jaime Cabal, the head of the retailer association Fenalco, says 40,000 companies have been forced to shut temporarily or permanently and close to 300,000 jobs have been lost.
The blockade of the main Pacific port in Buenaventura has held up tens of thousands of tons of exports, including of coffee and sugar. State oil company Ecopetrol SA said that its ability to supply gasoline and other fuels from its Barrancabermeja refinery has been at risk since earlier this week, and the national federation of coffee growers says exports of the bean remain stalled.
With blockages also causing widespread shortages of goods including food, inflation is expected to jump more than one full percentage point, to 3%, this month from 1.95% in April, according to analysts surveyed by Bloomberg.
A survey carried out by the association of exporters, known as Analdex, showed that just in the first two weeks, 63% of companies were forced to suspend operations and 86% say revenue has been slashed as mobility in highways as well as port activity is affected, impeding not only goods from leaving the country but also the entry of raw material for local production.
The economy may suffer a long-term impact from the current unrest. As Fenalco’s Cabal said, the jobs lost “will be very difficult to recover.”
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