Despite the uncertainty and volatility that has been seen in National market in the last week, the macroeconomic situation in Colombia it would not worsen with the change of government. This is what he says Ernesto Revilla, Citi’s chief economist for Latin America and who is still positive for the GDP of the country for 2022 and 2023.
(See: The 1,000 largest companies in the country represent 77% of GDP).
In this sense, Revilla points out that “There are still many details to see what will happen to the government, but I do not expect there to be a macroeconomic deterioration because Colombia has strong institutions: it is necessary to see the majority that it will have to carry out the projects and the central bank (Banco de la República) is independent . In addition, I think that Petro will resemble Boric, Castillo and López Obrador, who in their campaigns were more radical in their proposals, but when they came to power the macro party has remained relatively orthodox. Looking forward you can see lower growth, but not an economic crisis”.
Given this, Revilla remains optimistic about the country’s economy: “The economic activity of Colombia is very surprising, with a good internal demand. In fact, it was already surprising before the pandemic”.
(See: Inflation would continue to rise and would reach 9.56%, according to analysts).
According to the country’s estimates, Colombia is in the small group of countries in the region whose growth is above the average of the last 20 years, since it foresees a GDP growth of 5.9% in 2022 and 2.9% in 2023, while this figure has been 4.2% in the previous two decades.
It should be noted, however, that among the investors there is still uncertainty about the country.
According to Ernesto Torres Cantú, CEO of Citi for Latin America, “there is a feeling of waiting and seeing what happens in terms of investments, to see what possible legislative changes and changes in the rules of the game there are, so it is key that the next government has good communication with companies, clearly telling them what it is going to change, and that will increase confidence”.
(See: Sustain GDP growth, the challenge of the new government).
Regarding the prospects for the country, Citi Research expects an inflation of 8.9% at the end of this year and 4.2% at the end of 2023; a Banco de la República rate of 8% this year and 6.75% the next; and an exchange rate at which the dollar would be, at the end of 2022, at $3,995 and, in 2023, at $3,920.
Gustavo Petro, President-elect of Colombia.
Less optimism for Latin America
Contrary to the good prospects for Colombia, the figures for Latin America they look worse Citi Research estimates a growth of 2.2% this year and 1.6% for 2023, which is a lower figure than the average of the last 20 years, a figure that is established at 2.9%.
(See: Contribute and improve the pension system: message from Asonfondos to Petro).
In this sense, according to Revilla, “Latin America is suffering several shocks, among which is still the pandemic, the war in Ukraine and the Fed’s movements. Having one of these would already be a blow to the region, but there are several, which makes the biases of growth are down and inflation is up. And to this we must add internal factors such as discontent and the fact that inflation is very negative in political terms”.
Given this, the chief economist of Citi Research for the region assures that inflation will remain high in Latin America, “but we believe that it is reaching its maximum and could be seen more clearly at the end of this year and the next”.
(See: Trade deficit already reaches US$4,801 million in 4 months).
A key factor in this worse scenario for Latin America has to do with the lower growth expected since USA Y China, countries that for Citi Research would have a rise in GDP of 2.3% in the case of the first and 3.9% in the second.
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