Colombia | Let us not allow economic imbalances derail us

There are a wide number of important economic indicators that are not broadly disseminated when we refer to the economic situation and its forecasts. In this opportunity, we will focus on the most relevant macroeconomic balances: external and fiscal.

Key points

• Key points:
• The external balance summarizes the relationship between the country and the rest of the world. On average, this indicator is in deficit for Colombia, at -4.6% of GDP in the last decade, which means, among other factors, that imports have been greater than exports.
• In the post-pandemic period, the external balance reached a high level of -6.2% of GDP, largely supported by a strong consumption of imported goods. In 2023, with the slowdown in activity, the deficit stood at -2.7%. By 2024, we expect it to remain at similar levels and then gradually become more deficit-ridden.
• The fiscal balance, resulting from the difference between government spending and revenues. In this case, the pandemic had a strong impact on this result, taking it from -2.5% of GDP in 2019 to -7.8% of GDP in 2020, as a product of government support to the health system and vulnerable households.
• The government estimates a fiscal deficit of 5.6% and 5.1% of GDP for 2024 and 2025 respectively, relatively high levels.
• The combination of these two imbalances is beginning to raise some alarms among investors and rating agencies. Therefore, it is of utmost importance to undertake the necessary economic reforms to structurally reduce these imbalances.

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