[Economics] IMF makes a sharp cut in the growth forecast for the Colombian economy in 2023; what is seeing bad in the country?

[Draeno]

 

A trend to lower forecasts is being seen globally and the reductions made by the International Monetary Fund, both for the world and for Latin America and Colombia, are very strong.

In 2023, the Colombian economy would not grow beyond 1%, according to the IMF, after having estimated, in October, that production in our country, which in 2022 was quite dynamic (7.5%), would grow at a rate of 2.2%.

The new IMF projection for Colombia (from April of this year) is below the forecast they had previously presented: 1.1%, according to the October report.

Internally, the Banco de la República recently adjusted its outlook for the country's economy upwards. The Issuer, contrary to all predictions, previously had an expectation of 0.2% for Colombia, and then passed it to 0.8%, at the board of directors meeting at the end of March.

It is a reality that the global economy languishes and it will be so, individually, in a large part of the nations. The international organization estimates that, in the world, the production will have a variation of 2.8% compared to the previous year, and that engine off speed will not be transitory, it would remain at 3% for at least 5 years, estimated the organism.

It would then be the lowest figure in decades and the IMF considered it an "anemic" prospect.

In the case of Colombia, by 2024, the speed would increase to almost double, since the forecast for next year is 1.9%.

If it rains here...
The IMF, in terms of projections, cut everything in its path. Thus, the economy of Latin America and the Caribbean will not expand beyond 1.6% this year, compared to the previous forecast, which was 2%. By 2024, the continent to which Colombia belongs will have an expansion of 2.2%.

By countries and economic areas, the financial organization forecasts a growth that Brazil, this year will increase its GDP by 0.9%; Mexico at 1.8%; Argentina at 0.2%; Bolivia at 1.8%; Colombia at 1%; Ecuador in 2.9%; Paraguay at 4.5%; Peru at 2.4%; Uruguay at 2%, and Venezuela at 5%. The contraction will reach Chile, which will have a reduction in its production of 1%. It would then be a new year in which our nation would not be so high in the list of countries in the region.

In the case of Central America, where the country of Bukele is located, it will progress towards 3.8% and the Caribbean towards 9.9% in 2023.

What happens in Colombia?
The internal panorama of Colombia is not far from what is happening in the world. The blow comes from many points, but, definitely, the interest rates applied, as a long and restrictive policy, in our case, have been one of those that has left the biggest purple in the local economy.

But there is no shortage of the smackdown coming from the geo-economy, not only from the war context in Ukraine, but also from the recent financial crisis in the United States and Europe.

On the purely local side, Colombia continues to receive the blow of uncertainty, which comes from the reforms that the government of Gustavo Petro has presented to the Congress of the Republic, which have a strong social component, but could also have a effect on employment (labor reform) and on the capital market (pension reform), according to some analysts.

Equalizing the loads, so that the economy resumes the path of growth, at least at the level of its potential, will depend a lot on whether inflation has peaked and, according to what the members of the Banco de la República's board of directors themselves have stated, on the confidence of Colombians that things with monetary policy are being done well.

 

https://www.semana.com/economia/macroeconomia/articulo/fmi-hace-un-fuerte-recorte-en-el-pronostico-de-crecimiento-de-la-economia-colombiana-en-2023-que-esta-viendo-mal-en-el-pais/202314/