The recent history of Colombia indicates that the country has experienced three major economic recessions derived from the Great Depression in the 1930s, the aftermath of the Latin American debt crisis in the 1980s, and a crisis at the end of the last century due to the collapse of the UPAC system.
Nowadays, the country could be facing a fourth recession, after the covid-19 pandemic, that has led to skyrocketing world inflation, which affects the pockets and economy of Colombians.
Most of these crises were linked to world events that contributed to a recession with great consequences.
For Gloria Nancy Ríos, Coordinator of the Finance Program at the Grancolombiano Polytechnic, economist, specialist in management and master’s degree in social psychology, if Colombia wants to come out of this situation well and avoid recession, it has to do with making the economy more expansive, without neglecting any sector of the economy, because they all add up.
“We have to calm down, be meticulous, plan, be well informed, without allowing ourselves to be absorbed by fear, but at the same time act. I am making the parallel between an economy and an ordinary person. When I refer to action, I mean that we need a lot of internal government policies to avoid inflation and unemployment at the same time. For this, the Government could use international reserves and carry out capital controls. In addition, the Banco de la República can use interest rates as a mechanism to control inflation and subsequently to expand the economy.says the expert.
For his part, for Diego Santamaría, a partner at the consultancy firm Bain & Company, “Faced with this scenario, it will be essential for companies to evaluate in advance by starting to use new “plays”, rationalizing and optimizing the product offer to mitigate the impacts on the offer and drive growth. In addition, executives will need to proactively balance investments in supply chain resilience in a low-growth/high-cost environment by developing mitigation strategies that simultaneously address current needs and build flexibility and agility. for the future”.
Over the past year, the global market has witnessed a sharp deterioration in economic prospects. While the IMF lowers its global GDP growth forecast for 2023 to 2.7%, in the United States, consumer expectations have fallen to levels not seen since 1980 and in China, the poor results of the real estate sector have deeply impacted consumer confidence.
According to Bain & Company, among the many factors contributing to these declines is the global credit slump, which has seen a 5 percentage point drop between the first and fourth quarters of last year, and while every region is dealing with their own challenges, these issues appear to be converging in the short term in the second half of 2022 and into 2023, presenting the possibility of another globally synchronized slowdown just two years after the last one.