The International Monetary Fund (IMF) delivered a new revision of the projections for the Colombian economy, and raised its expectation for this year’s GDP to 5.75%, more than one percentage point above the 4.5% in February. However, the entity warned about the risks that inflation currently has.
In relation to GDP, the IMF highlighted that “Colombia’s economic recovery in 2021 was one of the most dynamic in the region”, and that after a strong economic rebound last year, “the economic momentum is expected to continue in 2022”.
This figure of 5.75% would be achieved driven by strong household consumption and the continued recovery of investment and exports. In the medium term, the IMF expects GDP growth to converge towards its potential level, which is about 3.5%.
For the agency, the projected rise in prices of the main exports of raw materials would allow a significant reduction in the current account deficit, from -5.7% of GDP in 2021 to -3.3% and -3.4% of GDP in 2022 and 2023, respectively.
The IMF mentioned that inflation continues to rise, “driven by shocks on the supply side in a context of solid demand”, therefore, the entity estimates that higher inflation will persist, and that it will remain above the upper limit of the band of central bank tolerance (4%) during 2022, with upside risks. Inflation is projected to be around 6.75% by the end of 2022.