Colombia Economic Outlook, Third Quarter 2014

The Colombian economy will grow by 4.9% and 4.8% in 2014 and 2015. However, the momentum over the first quarter of 2014, driven at first by strong public demand, will be U-shaped, decelerating at the end of this year, while in 2015 growth will gradually accelerate as exports grow, together with investment in machinery, equipment and infrastructure. On the other hand, inflation is on the up in 2014 and 2015: the first half of 2014 saw greater demand-side pressure and surprises on food prices which were reflected in higher inflation; in addition, we are raising our inflation forecast to 3.4% by the end of next year, in response to El Niño weather events and its effects on food prices. Finally, we anticipate a monetary policy normalisation: the central bank, Banco de la República (BanRep), will lift its rate to 4.50% in August 2014, then pause because of a slowdown in economic growth, and continue with further increases from May 2015 onwards, up to 5.25%.

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