The LAECO Alliance publishes its forecasts for economic growth, inflation, unemployment and other macroeconomic variables of the Latin American economies for May 2020. A significant contraction is forecast in all countries due to the crisis generated by COVID- 19, which in some economies is accentuated by the decrease in the prices of oil and other commodities. In the Colombian case, Econometría Consultores forecasts a GDP variation of -3.0% for the current year. For more information on this analysis, request your subscription to the LAECO Monthly Newsletter.
May 2020 - Latín American Alliance of Economic Consultancies juncture report: Projections on the effect of the COVID-19 crisis over the economies
November 2019 - A regular economic performance mixed with political uncertainty
In terms of politics, The Constitutional Court declared that the Ley de financiamiento presented by the National Government was unenforceable. However, the Minister of Finance was allowed to file the bill again, which will possibly be accepted with marginal modifications. On the other hand, on October 27 regional elections took place throughout the country, which showed favourable results for the centre parties, and showed that the right and left parties had lost influence in many regions Finally, on November 21 there will be protest marches against the policies promoted by the National Government, to which multiple sectors of the population have joined
October 2019 - Uncertainty arises due to possible tax reform reversal
Economy: In recent days, the exchange rate has reached record levels in excess of 3,500 COP to 1 USD. This can be explained by the decrease in oil prices, the uncertainty generated by the trade conflict between the United States and China, and the risk associated with the plaint of the last tax
reform’s unconstitutionality, Ley de Financimiento. The reversal of this tax reform would reduce the tax collection and could affect Colombia's credibility in international markets. Conversely, inflation is approaching the upper target range of 4% (3.82% in September, year-on-year) and will possibly
increase in the coming months due to exchange rate pressures. A moderate growth scenario is expected (3.2% growth is forecasted for 2019), with a high level of unemployment (estimated at 10.7% for 2019) and a high current account deficit (4.6% of GDP). These potential figures would limit the
monetary and fiscal policy space.
Despite the rearmament, peace still stands
August 2019 - A rising exchange rate and stable growth
July 2019 - Weak economic stability and political tensions
In terms of politics, in the last days Jesus Santrich, ex-negotiator and part of the leadership of the FARC, was declared a fugitive from justice, for crimes after the agreement. Some consider this as a blow to the Colombian peace process, and others think that it is precisely what the deals for this type of crime envisage. The above, in any case, generate polarised positions about the implementation of agreements.
June 2019 - Bad news in the external sector
In June, DANE published the figure for the current account deficit for the first quarter of 2019, which was 4.6% of GDP. This indicator is alarming and is in line with other signs of the Colombian economy that has presented a less positive behaviour than the one observed the previous year. This scenario is complex, the real economy shows weak signals, and there is no room for accommodatory monetary policy since it could lead to further devaluation and higher current account deficit due to higher domestic demand.
May 2019 - The trade war between the United States and China affects Colombia's performance.
The effects of the trade war between the United States and China have generated pressures on the exchange rate, which has presented a significant devaluation during April and May. If this trend continues in the exchange rate higher economic growth could be expected (current forecast of 3.2%) led by better performance of exports, a decrease in the current account deficit (forecast at -3.5%) and possible increases in inflation (current estimates of 3.4%) led by the tradable goods sector.
April 2019 - IMF updates its outlook for Colombia and approaches Econometria's Outlook
The IMF reduced the growth forecasts for Colombia, for the year 2019 from 3.6% to 3.5%, the estimates of the unemployment rate of 9.1% increased to 9.7% and increased the forecast of current account deficit from 2.4% to 3.9% of GDP in the last version of the World Economic Outlook. For 2019, we expect that GDP growth will be around 3.2%, the unemployment rate will have an average value of about 10.7% and the current account deficit will be about-3.5% of GDP.