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Colombia’s energy sector has shed 40,000 jobs over the last two years, since the oil price rout started, the country’s Labor Minister Clara Lopez told media at a National Business Association of Colombia event over the weekend.
The effect of low oil prices was especially obvious in three regions that are heavily dependent on oil and mining for their livelihood: Llanos Orientales, Huila, and Santander.
Lopez said the local governments in these regions must consider retraining programs and industrial restructuring to deal with the effects of the energy crisis. She added, however, that there were many technical positions that needed filling, but remain vacant for lack of trained personnel.
Unemployment in the Andean nation reached 8.9 percent in July, an increase of 0.6 percent from a year earlier, thanks largely to layoffs in the energy industry. However, non-Colombian sources note that Colombia has fared much better than embattled neighbor, Venezuela, for example.
According to an Ernst & Young executive based in Colombia, foreign direct investment in the country more than doubled on an annual basis in the first quarter of 2016, even though FDI in energy dropped by 65 percent. Last year, overall FDI in Colombia fell by 26 percent, but the partial privatization of the state oil company and strong fundamentals helped Bogota to weather the worst effects of the crisis.
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Colombia’s government now has ambitious infrastructure plans that will see it spend some US$70 billion through 2035. It still has to tackle falling export revenues, however, especially falling oil and products revenues. In the first half of the year, crude oil and oil product exports dropped by almost 35 percent in the first half of the year. Industrial goods exports fell by 11 percent.
The central bank hiked interest rates in a bid to deal with this sluggish demand for Colombian goods, which has weighed on the local currency, and the outlook is actually good, according to rating agencies and the IMF.
The Colombian economy is expected to grow by 2.7 percent in the second half of the year, in striking contrast to the region, which, according to the authority will slow down by 0.3 percent from 2015.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.