President Gustavo Petro’s trills “have added significant volatility to Colombian markets,” they say in a text JPMorgan economists BenRamsey and Gisela Brant.
(Read: Sell Colombia as a country that is very good to invest: Ocampo).
“Colombia’s difficult macroeconomic situation makes it vulnerable to fears of policy errors, especially at a time of rising global risks and Colombia’s large external financing needs. We think this warrants re-entering some bearish positions”, say the experts.
They also point out that for Colombian assets, clearly positive catalysts are “difficult to identify”. “In general, this year we have been bearish on Colombian assets,” they added.
Petro’s comments, while far from concrete policy proposals, add to Colombia’s macroeconomic challenges amid tighter global financial conditions: parallel high deficits, rapidly rising inflation expectations, and evidence of an overheated economyassured analysts at JPMorgan.
(See: These are the doubts to be resolved about the purchase of land from Fedegan).
Furthermore, they are concerned the speed of the energy transition and its impact on fiscal accounts, possible pensions and agrarian reforms. The tax reform, which would increase 1.7% of GDP, will be used mainly for social spending, according to the Minister of Finance, José Antonio Ocampo. This limits improvements in budget accounts.
BLOOMBERG
