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Colombia Economic Forecast

Colombia Economic Outlook

Economic growth decelerated further in Q4 in year-on-year terms. The annual slowdown was broad-based and due to a base effect. In sequential terms, growth sped up slightly. Turning to Q1, both annual and sequential growth rates are likely weakening amid rising inflation and interest rates. Compared to Q4, consumer sentiment became more pessimistic in January and the manufacturing PMI fell deeper into contractionary territory in January–February. In other news, over the last month the president submitted to Congress a four-year development plan and bills to reform the health system and raise public spending this year. While higher government spending should boost growth, the radical nature of some of the reforms also threatens to undermine investment and the stability of the governing coalition—a cabinet reshuffle took place in early March.

Colombia Inflation

Inflation was steady at 13.3% in February—the highest print since March 1999. Inflation should cool in 2023 as domestic demand and commodity prices ease. However, inflation is seen lingering well above the Central Bank’s 2.0–4.0% target even at the end of 2023. Key factors to monitor include fiscal stimulus and the strength of the peso.

Colombia Economic Data

2017 2018 2019 2020 2021
Population (million) 47.4 48.3 49.4 50.4 51.0
GDP (USD bn) 312 334 323 270 318
GDP per capita (USD) 6 6 6 5 6
GDP (COP tn) 920 988 1 998 1
Economic Growth (Nominal GDP, ann. var. %) 6.6 7.3 7.3 -5.9 19.5
Economic Growth (GDP, ann. var. %) 1.4 2.6 3.2 -7.3 11.0
Domestic Demand (ann. var. %) 1.1 3.5 4.0 -7.6 13.4
Total Consumption (ann. var. %) 2.3 4.0 4.3 -4.1 13.6
Private Consumption (ann. var. %) 2.1 3.2 4.1 -4.9 14.5
Government Consumption (ann. var. %) 3.6 7.4 5.3 -0.8 9.8
Fixed Investment (ann. var. %) 1.9 1.0 2.2 -24.0 17.3
Exports (G&S, ann. var. %) 2.6 0.6 3.1 -22.7 15.9
Imports (G&S, ann. var. %) 1.0 5.8 7.3 -19.9 26.7
Manufacturing Production (ann. var. %) -0.5 2.9 1.5 -8.1 16.1
Retail Sales (ann. var. %) -0.1 5.4 8.1 -1.6 11.9
Unemployment (% of active population, aop) 9.7 10.0 10.9 16.7 13.8
Fiscal Balance (% of GDP) -3.6 -3.1 -2.5 -7.8 -7.1
Public Debt (% of GDP) 46.4 49.3 50.3 65.1 63.1
Money (ann. var. of M2 %) 7.1 5.0 8.7 14.3 11.8
Inflation (CPI, ann. var. %, eop) 4.1 3.2 3.8 1.6 5.6
Inflation (CPI, ann. var. %, aop) 4.3 3.2 3.5 2.5 3.5
Inflation (Core, ann. var. %, eop) 4.2 3.2 3.8 1.9 4.4
Policy Interest Rate (%, eop) 4.75 4.25 4.25 1.75 3.00
90-day DTF (%, eop) 5.21 4.54 4.48 1.89 3.21
10-Year Bond Yield (%, eop) 6.74 7.02 6.42 5.76 8.46
Stock Market (ann. var. of COLCAP %) 12.0 -12.4 25.4 -13.5 -1.9
Exchange Rate (COP per USD, eop) 2 3 3 3 4
Exchange Rate (COP per USD, aop) 2 2 3 3 3
Current Account Balance (USD bn) -9.9 -14.0 -14.8 -9.3 -18.0
Current Account Balance (% of GDP) -3.2 -4.2 -4.6 -3.5 -5.6
Merchandise Trade Balance (USD bn) -4.3 -6.4 -9.9 -8.9 -14.0
Merchandise Exports (USD bn) 39.8 43.0 40.7 32.3 42.7
Merchandise Imports (USD bn) 44.1 49.4 50.5 41.2 56.7
Merchandise Exports (ann. var. %) 16.8 8.1 -5.4 -20.5 32.3
Merchandise Imports (ann. var. %) 1.9 12.1 2.3 -18.5 37.7
Foreign Direct Investment (USD bn) 14 11 14 7 9
International Reserves (USD bn) 47.6 48.4 53.2 59.0 58.6
International Reserves (months of imports) 13.0 11.8 12.6 17.2 12.4
External Debt (USD bn) 125 132 139 155 171
External Debt (% of GDP) 40.0 39.6 42.9 57.2 53.8

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