Colombia | Domestic demand takes the lead in driving Colombia’s recovery

Summary

Domestic demand is driving Colombia's economic recovery, with GDP projected to grow by 2.0% in 2024 and up to 3.5% by 2026. Investment and consumption, particularly in durable goods, will fuel growth, while inflation and interest rates continue to decline.

Key points

• Key points:
• Private consumption is expected to grow by 2.1% in 2024, 3.4% in 2025, and 3.2% in 2026, driven by improved financial conditions and increased purchasing power among households.
• Fixed investment is projected to expand by 6.5% in both 2025 and 2026, led by infrastructure, non-residential buildings, and machinery. Housing investment will recover starting in mid-2025.
• The current account deficit will reach 2.9% of GDP in 2024 and rise to 3.5% in 2025, primarily financed by foreign direct investment.
• The policy interest rate is expected to close 2024 in single digits, decreasing to 6.00% by 2025, alongside inflation rates of 3.8% in 2025 and 3.4% in 2026.
• The exchange rate will depreciate slightly in 2025, reaching 4,265 pesos per dollar, before appreciating moderately in 2026, closing at 4,195 pesos.

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