The Minister of Finance, José Antonio Ocampo, participated in the Macrovisión 2022 event, organized by the Itaú bank, in which the head of the portfolio He referred to the three challenges currently facing the national economy.
Ocampo recognized that the Colombian economy “had a very strong reactivation in the second half of 2021 and the first of 2022 due to a much more expansionary fiscal policy than that of other countries”, but also mentioned that although growth has followed this year, “the latest follow-up data to the economy, the May ISE, shows a fall, perhaps foreshadowing what is to come”.
The minister acknowledged that one of the concerns facing the market today is the acceleration of inflation, which has led to a rise in rates globally, as has happened with the Banco de la República. “There is a moderate effect of interest rates on inflation, because it comes more from the supply side than from the demand side,” he clarified.
(Also: Ocampo asks Congress for tax ideas and to support the debate).
Ocampo also spoke about how the international context is adverse, due to the slowdown experienced by countries such as the United States, Europe and China.
According to the minister, the interest rate increase, as well as inflation, will be reflected in a slowdown in the economy, and for the second semester growth of less than 10.5% is expected that was reached in the first half of the year, and on the contrary it would be around 3.7%. Likewise, he said that Colombia will grow between 2% and 3% next year.
The minister spoke of three elements that he considers will represent an additional weight for Colombian economic activity. The first challenge he referred to are the weak social conditions. “The labor market situation remains worrying, as the level of employment has not fully recovered“, said Ocampo, who also said that “poverty is even more worrying”, whose levels are still well above those observed before the pandemic.
Second is the high Trade Deficit, “which reflects the need for export diversification and an ambitious productive development policy”, and also indicated that “to correct the external deficit it is necessary that the recent behavior of exports, especially non-traditional ones, be maintained”.
In matters of Public finances, the head of the Treasury portfolio assured that the task is immense. “We inherited levels of public spending that are barely moderating, the primary deficit has been reduced but is still very high, and Colombia’s commitment to the fiscal rule is to generate a primary surplus,” he said.
(Read: ‘Tax is not social, much less equitable’: Senator Luna).
Ocampo spoke about the situation of the Fuel Price Stabilization Fund (Fepc), which he assured has generated a deficit of 2.7% of GDP, and in terms of public debt, although he acknowledged that it has begun to fall, he maintained that it continued being “enormously high”.
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