The risk assessor Fitch Ratings confirmed his qualification for Colombia in BB+ with a stable rating outlook, the same note that he put last year at the beginning of July, when the country lost its investment grade.
(See: Why higher GDP in Colombia and Latin America is not as good as it seems).
According to Fitch, among the fundamentals of the rating is that “Colombia’s ratings reflect the country’s record of macroeconomic and financial stability backed by an independent central bank with inflation targeting and a free-floating currency”.
The firm clarified that Colombia’s ratings are constrained due to large fiscal deficitswhich have resulted in a relatively larger increase in debt and interest burden than the BB median, high commodity dependency, and weaker external accounts”.
(See: Colombian economy would grow 6.1% in 2022, estimates the OECD).
In its report, Fitch also indicated that for this year it expects a 6% growth, driven by a strong private public consumption and favorable terms of trade.
“This incorporates a carryover effect from 2021 which was particularly strong (4.5pp)”, recognized the rating agency, and said that it expects growth to slow down in the second half of 2022 as inflation affects household consumption.
(See: Colombia, the fourth Latin American country that receives the most foreign investment).
Another element that the firm mentioned in its document is that the country’s inflation rate has surprised on the rise and that expects inflation to reach 8% andn 2022 and 4% in 2023, above the central bank’s target of 3%.
BRIEFCASE
