Colombia | Taking the pulse of the economy: steady steps, not leaps

BBVA Research forecasts GDP growth in Colombia of 2.0% in 2024, 2.5% in 2025, and 3.2% in 2026, driven by recovering domestic demand, lower interest rates, and reduced inflation. Consumption and investment will gain momentum, while the external deficit will be financed by FDI.

Key points

• Key points:
• Inflation will decline from 5.1% in 2024 to 3.1% in 2026, allowing the Central Bank to lower its rate to 6.50% by 2025, boosting private consumption, particularly in durable goods and services, supported by stronger employment and real incomes in 2026.
• Fixed investment will grow by 3.9% in 2025 and 7.3% in 2026, driven by civil works and machinery. Building construction will recover from mid-2025, consolidating its contribution to economic growth.
• The current account deficit will reach 3.5% of GDP in 2026, mainly financed by foreign direct investment, reflecting the dynamism of imports and the improving fixed investment outlook.
• The exchange rate will remain high in the short term but appreciate by 2026 due to reduced external volatility and stabilized domestic financial conditions, enhancing competitiveness.
• Despite the optimism, structural challenges remain: increasing domestic savings and investment is essential to strengthen long-term growth potential. These issues will be key in future economic sustainability discussions.

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