Colombia Economic Outlook. Third Quarter 2020

Summary

Colombia started its recovery path after the strong second quarter shock due to the pandemic. This process will be slow and gradual and will be determined by sector openings approved by the national and local governments. GDP is expected to fall by 7.5% this year and to recover by 5.5% in 2021.

Key points

• Key points:
• In 2020, both private consumption and fixed investment will have sharp contractions. Investment will fall because of the excess idle capacity left in the economy and consumption because of confinement measures and rising unemployment.
• In 2021, the recovery will be led by civil works construction and the improved performance of social housing construction.
• The role of the public sector will be important in activity in the next two years. At the same time, Its efforts to safeguard progress in social welfare and consolidate it for the future will be key.
• Inflation will remain below the midpoint of the Bank of the Republic's target in both 2020 and 2021.
• Central Bank has room to reduce its intervention rate in the coming months. It should remain at low levels for a prolonged time.

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