Colombia forecasts economic growth and inflationary challenges

The Colombian Government has released its calculations regarding the expected increase in the country’s Gross Domestic Product (GDP) for this year, setting the estimates between 1.8% and 2%, as reported by Europa Press on August 17, 2023.

These data arise amid a period of economic slowdown, previously anticipated by institutions such as the Colombian Central Bank. According to the provided figures, the GDP for the second semester has experienced only a modest increase of 0.3% annually.

The Colombian Minister of Finance and Public Credit, Ricardo Bonilla, has mentioned the possibility of an “economic recovery scenario” in the second semester, pointing to the gradual reduction of inflation as one of the key factors.

Bonilla has also announced that the inflation target for the year-end is 9.2% year-on-year. However, the July data, according to the National Administrative Department of Statistics (DANE), indicates that the price index has remained at 11.78%, exceeding the established target.

The Colombian Government’s projections are supported by various international organizations. The World Bank forecasts a growth of 1.7%, while the Economic Commission for Latin America and the Caribbean (ECLAC) takes a more cautious perspective, with an estimated increase of 1.2%.

In response to the threat of economic deceleration, Minister Bonilla has directly urged the country’s central bank to lower interest rates, which currently stand at 13.25%.

As of now, the Bank of the Republic, under the leadership of Leonardo Villar, has not set a date to implement the first cut in interest rates. Although it’s recognized that the fight against inflation is not over, the minutes from the last meeting indicated that the bank would prefer to “maintain the current restrictive stance” in monetary policy until observing solid signals of inflation convergence towards the established target.

K. Tovar

Source: Cointelegraph

(Reference image source: Flavia Carpio, Unsplash)

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