New economic activity figures in Colombia suggest economic growth of 1.8% for 2024higher than the 1.4% projected in April, said the Bank of the Republic in its Monetary Policy Report (IPM) for July.
(Further: The proposal for Colombia to overcome the economic slowdown).
The report from the Colombian central bank indicates that economic growth for the first quarter, at 0.9%, was higher than the estimate by the bank’s technical team, which had projected it at 0.3%.
The IPM explains that this was due to external demand with a more positive contribution to the gross domestic product (GDP). given a sharper annual decline in imports and a larger than expected annual increase in exports.
He mentions that investment fell and private consumption did not grow, meaning that domestic demand continued to contribute negatively to annual growth, despite its recovery in the margin.
(Read: Preventive actions by the Attorney General’s Office could save millions in royalties).
Regarding the new projection, he mentions as an explanation that for the second quarter suggest that GDP would have continued its recovery partly as a result of positive shocks supply in the primary sector and demand in the tertiary sector, which may be temporary.
He also said that domestic demand has stopped falling on an annual basis and has completed three quarters with increases, mainly due to the performance of total investment and consumption.
The trade deficit would also widen slightly, due to imports that, on the margin, would grow more than exports.
On an annual basis, OECD GDP grew by 1.6% in the first quarter of 2018.
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Thus, according to the IPM of the Bank of the Republic, in the remainder of 2024 and towards 2025 the levels of economic activity would continue to recover, in an environment of external financing conditions that would become less tight and a less restrictive monetary policy, but compatible with inflation that would reach 3% plus or minus one percentage point in 2025.
However, expected growth in 2025 was also revised downwards from 3.2% to 2.7%, partly due to the larger comparison base implied by the upward revision in 2024.
(See: Colombia’s economy is far from reaching a point of equilibrium, according to a report).
This year, the Excess production capacity would be somewhat lower than those estimated in Aprilbut more pronounced throughout 2025 and would dilute at the end of the forecast horizon.
This would be the growth of the gross domestic product (GDP) for the year 2025.
The report clarifies that these estimates continue to be subject to a high degree of uncertainty due to external factors such as global political tensions and monetary policy in advanced countries, as well as internal factors such as uncertainty about the evolution and impact of the reforms presented to Congress and the response of domestic demand to local financial conditions and the announced cut in public spending.
(Further: Demand and consumption could give the economic rhythm a break in the second half of the year).
Despite the pause observed in the second quarterinflation would continue to gradually decline to converge to the 3.0% target by the end of 2025This decline would be contributed to by the cumulative effects of monetary policy actions, low exchange rate pressures, a still weak economic activity and the presence of excess productive capacity.
Holman Rodriguez Martinez
BRIEFCASE
