The world continues to be shaken by events that destabilize growth projections, such as the Russian invasion of Ukraine, new outbreaks of covid-19 in China, and rising inflation that is already having an effect on the rates of the main central banks. But while the projections of the different organizations are increasingly cautious for global GDP, and also for Latin America, Colombia continues as one of the favorites in the region, and the forecasts continue to rise.
(Colombia, among the economies that would grow the most in 2022 in Latam).
In fact, in the most recent report of the International Monetary Fund (IMF) published yesterday, it is highlighted that Colombia will be the Latin American economy that will lead the region’s growth in 2022, with a GDP of 5.8%.
“The most recent revisions that have been made for the economies are based on the shock of Russia and Ukraine, and to the extent that there are more exposed countries, the downward revision is greater. But in the case of Colombia the situation is different since the exposure to this conflict is quite low”assured Camilo Pérez, director of economic research at Banco de Bogotá, who assured that in areas such as trade, investment, remittances and tourism, the Colombian economy has almost no relationship with these countries.
(Agro and mines have not yet resumed pre-covid activity levels).
“You are even seeing some benefits in the case of oil. To the extent that Colombia is an important producer, it sees a benefit from the higher price, and for this reason the opposite projection in the growth trend is seen in the country, contrary to what is seen in most of the world, where the projections are revised downwards,” he said.
Banco de Bogotá revised its forecast upwards for the country’s GDP in 2022 a couple of weeks ago, and set it at 5.5%.
But as Wilson Tovar, manager of economic research at Acciones y Valores, also explains, optimism cannot be attributed to a single reason.
“On the one hand, we have a boost due to the oil issue and in general the best price of commodities, and although we have had inflation like the rest of the planet, our Central Bank has been slower, we were not among the first to lower the rates, and therefore the Issuer is not the one that is raising it the fastest, and that does not strangle growth by the same magnitude”, he indicates.
REOPENING AND CONSUMPTION
According to Tovar, demand has continued to grow, given that we have a good vaccination rate, and that has facilitated the return to face-to-face attendance and has boosted economic dynamics. And if you look at imports, you see a powerful aggregate demand, not only for consumer products, but for raw materials and machinery.
And the Colombian government has implemented support programs and to the extent that they are still sustained, they have helped maintain that demand,” Tovar said.
On the other hand, Carolina Monzón, manager of Economic Research at Itaú Colombia, assured that the normalization of most economic activities has helped consolidate the recovery, “not only with a total reopening of sales, but also with the favorable figures at the beginning of 2022”.
According to Monzón, domestic consumption is helping to reactivate the economy, but he assured that the interest rate and inflation could moderate consumption in the second half. That is why Itaú expects growth of 4.5% this year.
Other positions are more conservative, such as Grupo Bolívar-Davivienda, where GDP is expected between 4% and 4.2% this year. “Although Colombia is going to grow more than the average of Latin American countries, the IMF’s projections are excessively optimistic,” said Andrés Langebaek, executive director of economic research at the group.
Langebaek stressed that the recent revaluation of the peso helps to mitigate the adverse effect of the increase in international prices and mentioned that a large part of the fiscal packages of other countries have been falling at a significant rate and that this produces lower global economic growth.
“In Colombia the difference is that we have a fiscal package that is still important and that we have oil that benefits us compared to the rest of the world,” said the spokesperson for Grupo Bolívar-Davivienda, but stressed that growth in recent years has been driven by public spending, and therefore the debt has increased.
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