The most recent Dane report showed that Colombia is the country with the highest economic growth in 2021 in the world. The country registered un GDP of 10.6%. A figure never before recorded in the national territory.
(Read: Colombian economy grew 10.6% in 2021).
Added to this news is the latest report from the International Monetary Fund on the Colombian economy. According to the entity, Colombia is one of the countries with fastest recoveries region of. Mainly for private consumption.
“With the progress made in vaccination plans and the reopening of the economy, the strong growth momentum is expected to continue in the short term. However, there are still downside risks considering that the pandemic is not over“, writes the entity.
Although it had a good report, the organization recognizes that the job recovery it has been slow. There have also been some problems “in the supply chain, the increase in the prices of food and raw materials has led to higher inflation, and the consumption-led recovery has resulted in a larger external deficit.”
According to the IMF, the country had a comprehensive response to the pandemic, which allowed him to create optimal conditions to increase private demand. In turn, there were fiscal measures that offered support to vulnerable households and businesses, which led to many being able to replenish their savings.
(What’s more: ‘2021, the year of reactivation’: reactions to GDP).
Now, although the vaccination plan has reached 64% of the population, the IMF acknowledges that there is a lack expand your reach because the new variants continue to be a challenge. Along with this, inflation continues to rise, which is an issue to take into account for the economy in the short term.
“Colombia is vulnerable to a drastic increase in global risk premiums and other external shocks, within a context of high global uncertainty“says the report.
With regard to public finances, the Monetary Fund emphasizes that 2022 could be the year in which the goal is achieved.lower fiscal deficit than expected in the medium term. For this, it is important to have begun to reduce the fiscal financing options that increased during the pandemic.
“The Social Investment Law is an important step in the right direction and the mission welcomes the strengthening of the fiscal framework“, they explain. The entity’s 2022 Mission emphasizes that Colombia must have new sources of fiscal income to safeguard social protection programs and public investment.
About the control ofconsumer prices, suggest monetary tightening by the Banco de la República. “Further measures to raise interest rates during the first half of the year in order to sufficiently tighten financial and monetary conditions should drive inflation down,” they explain.
The mission found that Colombia has strengthened its regulatory and financial system in an important way. Therefore, it encourages the country to continue monitoring debts, credits and loans.
(Keep reading: Dane revised down the economic growth of 2019 and 2020).
Finally, they highlight the importance of reducing the barriers to formalization business and labor, as an alternative to reduce unemployment and improve productivity.