July 2019 - Weak economic stability and political tensions

The Colombian economy shows no signs of significant changes. In May, the national unemployment rate was 10.5%, while in the same month in 2018 it was 9.7%. On the other hand, year-on-year inflation in June (3.42%) continued at the levels it had been in the previous month (3.3%) and was led by food inflation.

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.

March 2019 - Downward adjustment of the macroeconomic outlook for 2019

The global macroeconomic environment expected for 2019 is unfavourable for Latin America and Colombia. In the internal context, the main leading indicators of the Colombian economy for the year 2019 already show adverse signs. With this in mind, the economic growth forecasts for the Colombian economy are adjusted for 2019, going from 3.5% to 3.2%. The inflation forecast also decreases to 3.6%, mainly because of two factors: the devaluation of the Colombian peso derived from a slight drop in the price of oil, and the El Niño phenomenon that is expected to take place during the year.

February 2019 - Unemployment rate close to 10%

 The national unemployment rate in 2018 was 9.7%. Compared to other Latin American countries, the Colombian unemployment rate is too high. However, it is one of the lowest records in the history of the country's economy in the present century.  The reasons behind the increase in the unemployment rate are varied: lagged effects of the oil prices drop, an economic growth led by non-labour intensive sectors and the migration shock caused by Venezuela's crisis.

January 2019 - 2018’s closure and forecasts for 2019

Econometria Consultores expects that during this year, the Colombian economy maintains the recovery path started in 2018. Although GDP information hasn´t been yet released, analysts agree that the economy will expand around 2,6%, which means a 0,8 pp increase compared to 2017’s growth.

December 2018 - A positive balance

During 2018, the behaviour of the main macroeconomic variables in Colombia was as expected by analysts. It is expected that by the end of 2018 the growth of the Colombian economy will be above the average of its peers in the region and that during 2019 it will continue its recovery path. Although growth data for the last quarter of the year are not yet available, this was a year of recovery. Other macroeconomic variables such as inflation are under control, and in general indicators such as the unemployment rate and the current account does not show alarms.

November 2018 - A tax reform, again

Over the last eight years, Colombia has implemented five tax reforms and it is likely that in 2019 this number increases to six. This reform seeks to reduce the fiscal deficit to 2.4% of GDP and, at the same time, finance strategic social programs of the government. To achieve this, the reform proposes multiple measures, including an increase of 19% of VAT in products of the family basket and a tax refund mechanism for the poorest people. The measure will be debated in the congress and possibly modified. 

October 2018 - What explains economic recovery?

At the end of 2017, a slight recovery was expected for 2018. Today, GDP growth has been higher than expected and inflation is in the target range. Recent economic recovery is explained by household and government consumption and it is expected that investment and export will also recover. However, global economy present threats for colombian economy.