Colombia | 2024: Transitioning from Minus to Plus or Even Further Plus

Summary

This year will go from less to more, but it could trend even more positively if investment gains momentum. This hinges on broader factors like the country's medium-term outlook concerning growth, fiscal matters, regulations, and inflation, among others.

Key points

• Key points:
• Both food and core inflation are on a downward trend. While it's premature to declare victory, our recently revised projections at BBVA Research suggest inflation will hover around 7% mid-year, drop to 5.4% by year-end, and further decrease to 3.8% by the close of 2025.
• This inflation outlook enables the Banco de la República to solidify and, more importantly, expedite the interest rate reduction cycle, reaching 7% by year-end and 5.5% by late 2025—a level close to the neutral real interest rate.
• The sluggish momentum at the end of 2023 will gradually reverse in the latter part of this year, anchored in household consumption, machinery and equipment investment, and civil engineering investment. These improvements align with enhanced financial, monetary, and inflationary conditions for households and businesses.
• The public sector plays a pivotal role in driving growth, both independently and in conjunction with private investment. There's much to be done to transition from a slow start to a more robust trajectory, and swift action is crucial in this first semester.

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