The world is coming out of the pressures caused by the pandemic, which were initially considered temporary, but have turned out to last, leaving an economic situation that generates more questions than answers for 2023.
(Economic recession or stability in Colombia? This is what analysts say).
In 2022, a way was sought for the economy to return to its normal rhythm, with the hope of starting global manufacturing and production; However, this new year is economically challenging as the world faces a number of headwinds in terms of widespread inflation, a sharp slowdown in global growth, policy uncertainty, the cost of living crisis, and a tightening of financial conditions.
Will there be an economic recession?
Professor Carlos Fernando Martínez, a professor at the Business and International Development School of the Grancolombiano Polytechnic, explains that “A recession is a decline in financial activities for a specified period of time, usually two consecutive quarters. In economic terms, it is defined as the fall in national income and production, which implies an increase in unemployment. Likewise, consumption decreases due to the increase in inflation figures and, with it, the price of certain products and services; negatively impacting the finances of individuals, companies and, in general, of society”.
This expectation of economic recession impacts the most important countries, but the strongest blow is received by those that depend on larger economies, as is the case of Colombia. For this reason, it must be borne in mind that one of the most critical situations would come to be generated with respect to what would be the order that should be expected with those economies that are in conflict.
(2023, an economically difficult year for Colombia).
In the case of Russia, the teacher explains that being a supplier and not finding options to move their raw materials causes higher prices and a conflict towards Europe. As far as China is concerned, it has been difficult for it to start its production, therefore, its economic growth is equal to or below the world’s. In terms of Latin America, it is seen that politics is accompanied by new changes, which will have repercussions on the economy, because countries with internal conflicts cannot easily produce and their growth expectations will also be a factor in recession.
The expert explains that the pandemic caused the world to go through a stagnation in production, to such an extent that it is currently produced at a slower rate than what is being demanded, causing the prices of products to increase and, as a consequence, there is widespread inflation in the world. Therefore, central banks have to monitor prices in an effort to avoid borrowing because if people keep spending, interest rates will have to rise more to respond to inflation.
(The reforms that the country would need if it came to an economic crisis).
In this order of ideas, the United States Federal Reserve It will be the bank that will set the tone to determine how the policies of increases in the central banks will work during the year, since it will be in charge of establishing whether they are maintained or increased during the first months of the year; Later, it will assess whether it is necessary to maintain it for the following months; and, by the end of the year, the Federal Reserve is expected to sedate interest rates again to seek a faster recovery.
What challenges does Colombia face?
The professor from the Grancolombiano Polytechnic explains the challenges that the Colombian territory faces in general terms and that have an impact on the Colombian economy for this year:
1. Foreign investment presents uncertainty, because many investment processes have been stopped to evaluate the behavior of the country’s policy.
2. It is probable that there will be complexities regarding international competitiveness, because the raw materials that are purchased in other countries will arrive at high prices due to the situation of the dollar, which will be reflected at the moment of having the finished products.
3. It is necessary to generate growth towards the international market so that national producers have new business opportunities by taking their products to markets such as Cuba or fully reopening the market with Venezuela. Options that were not opening up in previous years.
4. One way to determine growth will be through oil exploitation alternatives. For this, government decisions are required if the oil production policy should ultimately be changed towards other energy scenarios.
5. In climatic issues, the affectation is due to the effect of the girl that is generating problems of mobility, loss of crops, productivity in general terms and late process of recovery of internal production. For example, raising the minimum wage has consequences for all services, especially those that are governed by direct labor, which forces the percentage received for the service provided to rise.
6. The instability of prices that occur in the country will mark the inflation that will affect the behavior of the entire economy, for this reason, it is necessary to regulate and maintain economic, political and international trade stability in the medium term.
7. Most Colombian families will see themselves as very rational when it comes to spending, because incomes are low and needs cannot wait, especially now that inflation has been indexed to the economy, which will push up every year. prices.
8. It is essential to look for alternatives so that indebtedness levels decrease and thus be able to have and maintain a healthy relationship where indebtedness is minimal, especially in the financial sector.
Finally, although some economic observers say that the country will have a very diminished growth above 1.5%, with respect to 2022, the expert from the Grancolombiano Polytechnic believes that: “we could be above the growth forecast, since that percentage is expected to increase. Bearing in mind that this is also accompanied by the political process that the country is experiencing, as it must be measured in order to establish favorable or unfavorable expectations depending on the type of policy that is being implemented”.
