A favorable and recovered economy showed the Minister of Finance of Colombia, José Antonio Ocampo, in a seminar organized by the National Association of Financial Institutions (ANIF) of his country, although he warned of certain risks as a result of inflation and the tightening of financial conditions external.
On the one hand, he said that the internal rise in prices has hit the local economy considering the measures taken by the Banco de la República to stop its effect, but he considered that the positive side is that exports have been favored. "The boom in commodity prices after the war has resulted in higher inflationary pressures," he noted.
Although he estimated that “we have already reached the peak of global inflation”, he stressed that “the decline will be slow. An example of this is that in the US last month there was a drop in inflation, but it is still very high by their standards.
Along with this, the minister warned that the Colombian economy “will slow down in the second semester. The increase in interest rates and higher inflation will impact the pace of growth in the coming quarters and we forecast that during the second semester there will be growth below 10%”.
In this sense, he emphasized that economic activity will remain dynamic in 2022, although with a slowdown in the second half, which "will continue in 2023."
Investments
Another point highlighted by the minister during his speech at the seminar was the dynamics of capital flows, which have been stable in the first half of the year. In this regard, he commented that the visit of the Spanish president Pedro Sánchez and a delegation of businessmen, left happy accounts for the South American country.
“Spanish investors are number one, if we subtract oil, in investments in Colombia. During the meeting they announced US$ 1,500 million more in direct investment, which is a positive point to continue improving the expectations of direct foreign investment in the country”.
Economic Policy Challenges
During the meeting, Ocampo pointed out that the Government of President Gustavo Petro has proposed to face three challenges.
In the first place, he pointed out that he will address the weak social conditions in the country, with a practically recovered labor market, but that he is concerned about the high levels of labor informality. "In addition, we are concerned about the growth of poverty, which has been rising since before the pandemic and has left more than four million people below the poverty line," he explained. He added that they are also keeping an eye on rising inequality.
Added to this is the challenge of reducing the "high" trade deficit, for which they seek to diversify their exports. "Although all items are recovering (...) we are just beginning the process of diversifying our shipments, but we consider the competitiveness of the exchange rate to be relevant for the country's export dynamism," he explained.
In this sense, he pointed out that this challenge is faced with the reversal of the premature deindustrialization of Colombia "which has to do with low investment in science and technology, what I call national shame."
Finally, the third challenge for the new Colombian administration is related to the "weak" public finances, which will be counteracted with the tax reform that aims to complete 2 points of GDP by 2023.
To deal with this, the government is looking for new sources of income and has not ruled out the sale of some assets. "We are going to see some assets if they are sold not to the private sector, but to other public companies, especially in the energy part to EPM and Empresa Energía Bogotá," he pointed out.
In addition, this reform will make it possible to face all the challenges facing the Executive, both to improve social conditions, as well as to face the deficit and strengthen the country's finances.
https://dfsud.com/colombia/gobierno-de-colombia-define-tres-desafios-de-politica-economica-y-revela