BBVA Research forecasts a slow, steady recovery for Colombias economy, with growth of 1.2% in 2023 and 1.5% in 2024.Meanwhile, it expects inflation to keep dropping.The report indicates that internal demand will decrease to 1.7% this year.
However, it will climb to 1.8% next year.Additionally, private spending should recover from 0.5% in 2023 to 1.8% in 2024.Economic growth will slow down this year after a 7.5% boost in 2022.
According to the analysis, most of the 2024 growth will come from household consumption.Mauricio Hernndez, an economist at BBVA, links slow growth to a decline in construction.This sectors fall didnt balance out reduced private spending, as usually happens in downturns, he noted.Slow Colombian Economic Growth for 2023-24 Forecasted.
(Photo Internet reproduction)On the inflation front, BBVA sees a 9.7% Consumer Price Index (CPI) at year-end.
It predicts this will drop to 5.4% in 2024.Several factors, such as weather patterns, fuel price changes, and currency value shifts, will influence this.Currently, interest rates stand at 13.25%.
BBVA expects these will start dropping by the end of the year.We foresee a rate of 12.5% in December, followed by a gradual decline to 7.0% in 2024, stated Juana Tllez, BBVAs Chief Economist for Colombia.Tllez adds that monetary choices will hinge on inflation, expectations, and economic performance.These elements will create room for future rate cuts, especially given the high accurate rates expected by years end.BackgroundColombias slow growth isnt an isolated event compared to other Latin American countries.Countries like Argentina and Brazil face sluggish economies, making it a regional trend.This allows Colombia to learn from neighboring policies, specifically those that have effectively dealt with inflation and interest rates.On a global scale, economies worldwide are recovering at varying paces from the pandemic.While some Western countries are experiencing quick rebounds, emerging markets like Colombia are lagging.The gradual decrease in interest rates in Colombia mirrors the cautious approaches taken by central banks in other developing nations.