Annual Report 2023

Environment in 2023

The year 2023 was marked by challenges posed by inflation, which remained at historically high levels worldwide. The major central banks around the world continued to raise their benchmark interest rates, tightening monetary policy.

A single truck driving on an empty road through vast agricultural fields (photo)

Economic growth was moderate due to the widespread fall in private consumption. Families and businesses saw their purchasing and investment power diminish due to inflation and high interest rates on bank loans. Nevertheless, most households benefited from the resilience of employment at global level.

Despite being high, inflation fell over the course of the year in most economies, mainly due to the high price levels in 2022 and a reduction in energy prices. Reference interest rates in the world’s main economies saw an upward trend, with a total of four increases from the US Federal Reserve to the highest level since 2001, while the European Central Bank (ECB) raised interest rates six times, to the highest level ever recorded in the euro zone.

The year 2023 was also marked by geopolitical tensions, with the wars in Ukraine and Sudan continuing and the outbreak of a new conflict in the Middle East.

Although these tensions are reflected in greater market volatility due to a global lack of confidence and in the necessary macroeconomic adjustments, according to the International Monetary Fund (IMF), global Gross Domestic Product (GDP) grew 3.1% in 2023, a growth that should remain stable in 2024, indicative of the resilience of the economies.

In Poland, the year was marked by the parliamentary elections held in October, which led to a change of government.

In Portugal, the political situation also changed. The Prime Minister’s resignation led to the dissolution of parliament by the President of the Republic, who called early parliamentary elections for March 2024.

In Colombia, the President suffered heavy defeat in the regional elections, making it difficult to implement the government’s policies, which depend on the support of congress.

Gross domestic product

Last 3 years

Gross domestic product (bar chart)

Poland recorded weak economic growth in 2023, of 0.2%. Private consumption stagnated due to inflation and high financial costs. Investment remained strong, despite the decline in the construction sector.

The Portuguese economy also slowed. GDP grew 2.3% in 2023 as a result of tighter financial conditions and little economic growth of the main trading partners. Industrial production slowed and the export of goods fell sharply. Conversely, strong recovery of the tourism sector and the increased implementation of the Recovery and Resilience Plan (PRR) contributed to the country’s economic growth.

In Colombia, GDP growth has slowed substantially since the end of 2022, growing just 0.6% in 2023. Investment fell to around 15% of GDP in 2023, compared to an average of 23% in the 2014-2019 period. High interest rates and political uncertainty were the main factors contributing to this decrease. Private consumption, which was one of the main drivers of post-pandemic recovery, also decelerated. Inflation in 2023 stood at 11.7% (10.2% in 2022), with underlying inflation, which excludes food and energy products, standing at 10.0% (6.5% in 2022).

Consumer price index

Last 3 years

Consumer price index (bar chart)

Inflation in 2023 decreased in most economies but remained at historically high levels. The reduction in energy prices was the main factor that contributed to this decrease. Underlying inflation, which excludes the more volatile energy and food prices, remained relatively high.

Inflation in Poland fell over the course of 2023 but remained at high average levels. The reduction in supply chain disruptions was the key factor driving the slowdown in price rises. Underlying inflation fell less sharply due to the resilience of the labour market, which led to significant wage increases and, consequently, supporting demand. To mitigate high inflation, the Polish government decided to maintain VAT cuts on essential food products throughout 2023, keeping the measure in place until at least the end of the first quarter of 2024.

Inflation in Portugal was 4.3% in 2023. The decline in inflation was faster and broader than expected at the start of the year, due to base effects and the positive impact of energy components. In April, the government introduced a temporary reduction in VAT on a basket of essential products, which remained in force until the end of the year.

Despite lower food inflation, inflation in Colombia climbed again, as a result of higher transport prices and higher housing and energy costs.

Reference interest rate - EoP

Last 3 years

Reference interest rate - EoP (bar chart)

In 2023, the main central banks tightened monetary policy.

In Colombia, interest rates increased three times to 13.25%, the highest recorded in the past 25 years. In December, interests were cut 0.25 p.p. to 13.0%.

In Poland, rates remained unchanged at 20-year highs until September when a 0.75 p.p. cut was announced, surprising the market. An additional 0.25 p.p. cut was implemented in October, bringing the reference rate to 5.8% until the end of the year.

In Portugal, reference rates were raised six times by the ECB, equivalent to a total increase of 2.0 p.p., to an all-time high of 4.5%.

Total and food retail sales indices

Constant prices

Total and food retail sales indices (line chart)

Total sales in the retail sector, at constant prices, recorded worse performance in 2023 than in 2022, with negative real growth rates in Poland and Colombia. This was mirrored in food retail sales, due to the decline in household disposable income, made worse by high food inflation, high financing costs and low confidence. Steady employment levels helped to contain this pressure.

Consumer confidence indicator

Last 3 years

Consumer confidence indicator (bar chart)

The Consumer Confidence Index improved in Poland and Portugal in 2023, although it remains in clearly negative territory. In Poland, the indicator improved steadily throughout the year. In Portugal, confidence improved between January and July, but fell again in the subsequent months. Even so, confidence was almost always higher than in 2022. In Colombia, the average annual confidence index for 2023 fell compared to that in 2022, although the indicator improved in the second half of the year, closing 2023 with values close to those recorded in 2022.

Unemployment rate

Last 3 years

Unemployment rate (bar chart)

The global labour market remained fairly resilient, with the unemployment rate in Poland falling in the first half of the year and stabilising since then. Strong pressure from the labour market once again contributed to strong wage growth in 2023, cooled slightly with Ukrainian citizens joining the Polish labour market.

In Colombia, the unemployment rate also fell steadily in the year. In Portugal, the average unemployment rate increased 0.4 p.p. compared to 2022.

As regards exchange rates, in 2023 the zloty recorded an average annual exchange rate1 of 4.5336 against the euro, an appreciation of 3.4% compared to the average rate of 4.6883 recorded in 2022.

The Colombian peso closed the year with a strong appreciation1 of 20.2% in the foreign exchange market (4,223 on 31 December 2023 compared to 5,075 on 31 December 2022). Even so, the peso recorded an average annual exchange rate of 4,640 against the euro, a depreciation of 3.4% compared to 4,480 in 2022.

For 2024, the general expectation is that economic growth in Poland will recover, with private consumption making a positive contribution, combined with robust investment and supported by the European Union’s RRF funds. Monetary policy should ease and could lead to a moderate reduction in interest rates, given the risk of persistent inflation and the uncertain economic and political outlook.

The Portuguese economy is expected to grow very slightly in 2024, fuelled by private consumption which could possibly be supported by a reduction in inflation on household income and the waning of some effects of the ECB’s restrictive monetary policy, if these take place in the first half of the year. Private investment is also expected to grow, supported by RRF funds. The low contribution of net exports is likely to hinder GDP growth in 2024.

In Colombia, inflation, high interest rates and political uncertainty are expected to put pressure on domestic demand, leading to very moderate economic growth in 2024. Food inflation is likely to come under further pressure due to weather conditions, with the downward trend expected to continue. The severity of climate phenomena could see upward pressure on food and electricity prices, due to lower agricultural and hydroelectric energy production. Should this occur, the central bank could postpone the round of interest rate cuts, restricting lending and leading to a further economic slowdown.

The trajectory of inflation in 2024 is uncertain at a global level. On the one hand, the rise in real wages should give families greater purchasing power, but on the other, uncertainties remain about the evolution of energy prices and the logistical impact of military conflicts. Inflation should continue to decelerate, gradually meeting the central banks’ inflation targets.

1 Average annual exchange rate determined by weighting the turnover of the Group Companies operating in this currency

Sources: Banco de Portugal Economic Bulletins; Portuguese Ministry of Finance; Portuguese Statistics Office (INE); National Bank of Poland Economic Bulletins; Central Statistical Office (GUS); Banco de la República (Colombian Central Bank); Colombia National Administrative Department of Statistics (DANE); Fedesarrollo; Nielsen and BMI; Future Minds, Fitch BMI, Mordor Intelligience, iAlimentar, America Retail, Valora Analitik.

Note: All macroeconomic data presented in this subchapter are based on the latest available information at the closing date of this report.


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