Colombia | BBVA Forum: Pedaling Toward Economic Revival

The BBVA Forum is a quarterly event aimed at the bank's clients. In each edition, we present a summary of our global and national economic outlook as a contribution to their short- and medium-term financial decisions.

Key points

• Key points:
• This time, the presentation contains global and local projections for 2024 and 2025 of the main economic variables: GDP, inflation, interest rates, exchange rate, and macroeconomic balances.
• The global economy has so far experienced a very soft landing. Growth has surprised on the upside, and inflation has remained stable due to the dynamism of the services sector and expansive fiscal policy. It is expected that inflation will continue to decrease, driven by a lower demand dynamic and the "normalization" of supply. Interest rates will remain at contractionary levels for a long period of time. The world will transition from growing by 3.2% in 2023 to 3.1% in 2024 and a recovery of 3.3% in 2025.
• In Colombia, the signs of economic recovery are not yet as certain, but they already indicate that the turning point for the economy should be sometime in the second half of the year. GDP growth will be at 1.8% this year and 2.8% in 2025.
• Inflation will continue to recede, with less momentum in the coming months, due to base effects in food and persistence in services. Additionally, the expected increase in diesel prices will have direct and indirect effects on prices. Inflation of 5.4% is expected in December and 3.8% by the end of 2025. The monetary policy rate will reach 8.5% by the end of 2024 and will approach its neutral level in 2025, around 6.0%.
• There are at least three needs that must be addressed, with the effort of both the public and private sectors, to achieve greater growth in Colombia: improving education, social inclusion, and health with a major social infrastructure plan; connecting production centers with consumption centers; and boosting the country's entrepreneurial fabric.

Authors

Geographies

Topics

Tags