Economic Forces
If the GDP continues to grow, there is a positive effect on the economy, since these increases increase the income of companies, families, and administrations, which will have more capital to invest and create jobs, which creates an opportunity for the industry
https://tradingeconomics.com/colombia/gdp-growth-annual
pib.htmlhttps://www.portafolio.co/economia/finanzas/pib-bebidas-textiles-comercio-y-transporte-los-jaloneadores-del-pib-569807
Gross domestic product
OPPORTUNITY
The gross domestic product (GDP) is the total value of final goods and services produced by the country during a defined quarter that allows finding the evolution, trend, and transformations of the country's economy, based on comparable data. The National Department of Statistics (DANE) is in charge of calculating Colombia's GDP .
The Colombian GDP grew 7.5% in 2022. During the second quarter, Colombian economy grew 12.3%, according to portfolio magazine, this is driven especially by the branch of commerce, manufacturing industries and public administration; the manufacture of textile products and the manufacture of clothing grew 30.3%.
Unemployment trends
OPPORTUNITY
The unemployment rate is the percentage relationship between the number of people who are looking for work and the number of people in the labor force of a country. DANE.
According to the unemployment graph in Colombia, in the last few it is evident that the unemployment rate has decreased since 2020. In December 2022, the unemployment rate in the total of the 13 cities and metropolitan areas stood at 10.8 %, for December 2021 it was 11.4%
If unemployment continues to decrease, it is an advantage for the industry since people will have more income and companies in the industry will generate more sales, contributing to the country's economy.
Propensity of People to Spend
THREAT
The propensity to consume is the proportion of total income a consumer tends to spend on goods and services rather than to save. It is influenced by various factors such as income, savings, debt, economic conditions, and personal preferences. According to The Encyclopedia Britannica, low-income families may be forced to dissave or go into debt to provide themselves with basic necessities and they will have less capability to spend in things that are not inside of the family basket or inside their necessities.
The table shows the Colombia Consumer Price Index, after analyzing it and understanding the concept of propensity of people to spend, we can say that those are related, as the (IPC) increases the propensity of people to spend decreases, because they will be able to buy less things due to the rise in the prices of the basic basket products.
Inflation Rates
THREAT
Inflation occurs when there is a broad increase in the price of good and services, not just of individual items, it means you can buy less for more. In other words, inflation reduces the value of the currency over the time. In Colombia, the three main components of the consumer price index are: housing and utilities, food and non-alcoholic beverages and transport.
In the table, we can see how the inflation rates is in constantly increase. From April 2022 to January 2023, the inflation has increased 4.02, making the inflation pass from 9.23 to 13.25 in less than a year, making not only the products go up, but any other service.
The inflation rises more very day, and with the pass of the time you can buy less for more, affecting not only people but all industries in all sectors. This is a threat for the textile industry because the prices of production, raw material and labor of the products will rise
This element can be considered as an opportunity for the manufacturing industry considering that Colombia has a high record of labor productivity levels, which means that they have good performance, efficiency in human capital and use of available resources in the production process. In other words, for this industry it would represent a great advantage in terms of production, quality and sale of the products manufactured within the different companies.
Worker Productivity Levels
OPPORTUNITY
Labor productivity is an important economic indicator that represents the total volume of production, in terms of GDP, produced per unit of work, measured either in number of employees or hours worked. This indicator allows us to evaluate the rates of growth, efficiency, and quality of human capital in the production process, in the same way it represents the efficiency in which the available resources are used.
From the graph, the levels of labor production in Colombia have been varied considering that from 2017 these levels were increasing progressively until 2020 where considering the environmental problems experienced by Colombians, these levels were increasing and decreasing. until the beginning of 2022, when labor productivity began to level off without decreasing. Similarly, it is evident that Colombia over the years has been a country with a high level of labor productivity as evidenced in this graph.
Import/Export factors
OPPORTUNITY
The import and export processes have as their main objective the exchange of goods or services between countries, since having more income of goods or services to a country makes it much easier for consumers to acquire, but this requires a broad vision of international trade, this, since there are regulations so that governments have control of this free entry and do not affect the internal economy.
In 2021, exports in Colombia grew by 25.48% compared to the previous year. Foreign sales represent 12.82% of its GDP, a low percentage compared to that of other countries, which places it in 140th position out of 191 countries in the ranking of exports with respect to GDP. In 2021, imports into Colombia grew by 35.69% compared to the previous year. Purchases abroad represent 19.45% of its GDP, which is why it is in 36th place, out of 192 countries, in the ranking of imports with respect to GDP, ordered from the lowest to the highest percentage.
This element can be considered as an opportunity for the manufacturing industry considering that Colombia has a high record of labor productivity levels, which means that they have good performance, efficiency inFrom the data it can be concluded that both imports and exports are a very good opportunity for the manufacturing industry since this industry tries to convert raw material into a good or final product, so imports help this industry since The imported raw material can be cheaper than getting it in the country of origin (Colombia) and thus expenses are reduced and the utility of the industry is benefited, likewise, exports also help the manufacturing industry since with this the industry can take their products to other countries and thus expand your business and sales. human capital and use of available resources in the production process. In other words, for this industry it would represent a great advantage in terms of production, quality and sale of the products manufactured within the different companies.
The conclusion is that as we see that the gross domestic product of many countries is decreasing, we notice that consumption and company profits are decreasing, thus reducing employment and investment in those countries. So we conclude that because of the pandemic there was a drop in the economy and that can increase the prices of imports of materials and make more complicated the handling of these materials.
Foreign Countries' Economic Conditions
THREAT
All the things that happen in 2020 in 2021 and in 2022 affect all the economy and market of the world, for example in 2020 the pandemic stop all the travels of business and many companies close because they don't have the capacity to stay because they don't sell anything. let think how many companies do this , the world lost a lot of money. This is the moment when we see how many thing increase faster like taxes .
In the following chart we see how the gross domestic product of some countries increased, and with this we can see the economic stability of some countries such as France had the highest in the second quarter of 2021 and in 2022 the highest was that of Colombia, the sector that contributed the most was Trade, with 4.4 percentage points, Manufacturing with 2.5 and Administration with 1.6.
Another thing we can see is that the percentages decreased by a large amount in all the countries shown in the graph.
Foreign Countries' Economic Conditions
OPPORTUNITY
Is a level at which a government imposes taxes, generally expressed as a percentage of the value of what's being taxed.
Today we find taxes in all the things we see in with the pandemic, increase a lot.
Some of the taxes we have to pay are those on imports of the materials used to manufacture the bags, we have to pay 19% VAT plus a 10% tariff in some cases (29% in total) must be paid on all imported products. We would also have a financial transaction tax of 0.4% per transaction. Another is the industry and commerce tax, which would be between 0.2% and 1.4% of the company's income.
The conclucion is that we have to pay some taxes for the materials that we are taken here, taxes are increasing for all the things we have to do in our company. On the other hand we have to have more clients because we need to expand our market, to have more money to pay all the taxes that as a company that imports materials plus those that we are asked to pay in the country.
In conclusion, this is good for the private sector because the more opportunities one has to access credit, the easier it is to finance the company or enterprise one has.
Availability of Credit
OPPORTUNITY
The possibility of accessing credit is an opportunity offered by the different financial institutions, with money loans for your business or the different things you need, but this also requires certain parameters to be able to acquire this.
According to data from the world bank, loans to private companies in 2020 increased 54.3%, which is good because it shows that it is a way for companies to help themselves or it can also be a form of economic solvency.
Domestic credit to private sector (% of GDP) - Colombia | Data (worldbank.org)
Interest rates
THREAT
The interest rate is the charge made by some financial institutions when making loans to different companies or individuals.
Today we can see that the interest rate in colombia is 12.75%, compared to the last months there was a growth of 0.75%. this is a disadvantage for the industry because the interest rates are a little high, which would no longer be the debt of the loan, but the interest rates.
- Colombia - Tasa de Interés | 1998-2023 Datos | 2024-2025 Expectativa (tradingeconomics.com)
- Tasas de interés de política monetaria | Banco de la República (banrep.gov.co)
- Tasa de Interés: Qué es la tasa de interés y por qué la cobran (bancodebogota.com)
In conclusion, this affects us because it would be a loan option but not the most viable due to the increase in interest rates.
Tax rates
As can be seen in the graph from 2017 to 2023 the percentage of the tax (VAT) has remained at 19%, which also applies to the textile sector. The graph shows us a stability between these years so it gives us some guarantees of viability, development and growth. On the other hand, we also have to look at the taxes that we have to pay for the textile sector, which this year increased to 40% for clothing and textile products coming from abroad.
On the other hand we would have to pay taxes such as ICA which is the tax of Industry and Commerce, this is generated by the realization of industrial activities directly or indirectly. They can also be either commercial or services, which are developed in a permanent or occasional way.
Another would be the income tax declaration, which is a tax on income obtained by individuals, companies and other entities. It is all the income obtained in a commercial year. A commercial year is understood as a period of 12 months which may end on December 31 or June 30 of each year.
Tax on financial transactions, which is the rate of the tax on financial movements will be four per thousand (4 x 1,000).
https://www.thebalancemoney.com/what-is-a-tax-rate-5214600
https://es.tradingeconomics.com/colombia/sales-tax-rate
https://www.semana.com/economia/macroeconomia/articulo/el-sector-textil-preve-que-el-aumento-de-los-aranceles-detonara-un-incremento-en-precios-de-la-ropa-y-perdidas-economicas/202328/
https://scj.gov.co/es/transparencia/informacion-tributaria/tarifas-liquidacion#:~:text=%C2%BFQu%C3%A9%20es%20el%20ICA%3F,de%20manera%20permanente%20u%20ocasional.
https://www.sii.cl/destacados/educacion/siieduca/aprende-con-nosotros/que-es-el-impuesto-a-la-renta-y-quienes-deben-declararlo.html#:~:text=Es%20un%20impuesto%20que%20grava,Impuesto%20Global%20Complementario
https://www.dian.gov.co/impuestos/personas/Paginas/gravamen_movimientos_financieros.aspx#:~:text=La%20tarifa%20del%20gravamen%20a%20los%20movimientos%20financieros%20ser%C3%A1%20del,2%20x%201.000)%20en%202020.