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COUNTRY INSIGHTS

When the Going Gets Tough
COLOMBIA · Report · 26 May 2015

Executive SummaryThe Central Bank is facing an unusual dilemma (for Colombia), of having to deal simultaneously with high inflation and economic slowdown. At 4.64% in April, inflation is at its highest since May 2009, mostly due to soaring food prices, and to a weaker currency. Yet the Bank recen...

Fiscal grievances and setbacks in Havana
COLOMBIA · Report · 28 Apr 2015

Executive Summary Private consumption and investment were the key drivers of economic activity in 2014: household consumption was up a faster 5.1% in Q4, despite spending slowdown driven by the deteriorated oil outlook. The consumption of non-durables (33% of total consumption) expanded by 4.5%; ...

Post-Bonanza Living
COLOMBIA · Report · 24 Mar 2015

Executive Summary The economy slowed in Q4, with GDP at 3.5% falling short of the government’s 3.8% projection. That took 2014 growth down to 4.6%, from 4.9% in 2013. The main activity drivers continued to be construction (up 5.9%) and commerce (4.5%), followed by government expenditure (social s...

The Moment of Truth
COLOMBIA · Forecast · 23 Feb 2015

Executive Summary This is likely to be a transition year for Colombia: the economy’s vulnerabilities will become apparent toward yearend, as reduced oil income subtracts from government revenues. Four crucial elements will determine the country’s path to recovery: first, oil and commodity price t...

Rough Road Ahead
COLOMBIA · Report · 21 Jan 2015

Executive Summary This year will be rough, and next year even rougher. While the full impact of plummeting oil prices will only hit fiscal accounts next year, the government faces huge challenges now in trying to calm investors’ jitters, and to restore confidence. This will involve showing how th...

Oil Prices, Full Employment and 2015 Politics
COLOMBIA · Report · 22 Dec 2014

Executive SummaryThough oil prices are down 20% from their 2014 peaks, the impact on economic results this year will be limited. Recall that the Colombian price basket is around 10% lower than Brent. 2015 growth forecasts are being cut, to account for a weaker mining sector, and for lower househo...

The Ups and Downs of 3Q
COLOMBIA · Report · 16 Dec 2014

Colombia’s GDP expanded by 4.2% in 3Q; while the economy is slowing relative to a more dynamic first half of the year, it is still in good shape vis a vis the rest of the world, and set to grow by close to 5% by the end of the year (Figure 1). The most vigorous sector continues to be construction...

Oil Sector is Key
COLOMBIA · Forecast · 24 Nov 2014

Executive SummaryThe Government is expecting the Current Account Deficit to reach 4% of GDP this year, due to reduced oil exports. However, if oil prices fell to put the average annual price at $93 this year, the 2014 CAD could be as high as 4.4% of GDP. But the impact of lower oil prices could b...

When Lawyers Rule
COLOMBIA · Report · 17 Oct 2014

Executive SummaryLawyers have dominated the Colombian landscape since independence from Spain. They explain a substantial portion of Colombian relative institutional stability; they currently want to re-established equilibrium between branches of government power, i.e. judiciary, legislative and ...

Worrisome Signals in 2Q GDP Performance
COLOMBIA · Report · 17 Sep 2014

Economic activity expanded by 4.3% in Q2, slowing relative to Q1, when it grew by an outstanding (given the state of the world economy) 6.5%. There were few surprises in this result. Construction remains the most dynamic sector, while housing construction (excluding “social purpose” public housin...

The German Forces against the Cárdenas-Maginot Line
COLOMBIA · Report · 15 Sep 2014

Executive Summary The test of the new governance layer that added Nestor Humberto Martínez as minister to the presidency will come sooner than expected: the proposed 2015 budget presents tough fiscal and political dilemmas. A crucial test will be defending the fiscal rule (a kind of fiscal Magino...

New Cabinet Includes a Weak Economic Hire
COLOMBIA · Report · 22 Aug 2014

Executive Summary President Juan Manuel Santos’ second-term priorities are state reform, especially to eliminate a president’s ability to run for a second consecutive term; to raise tax collection by at least 2 pp of GDP; and to conclude the FARC peace negotiations. A deal on the latter should be...

In Need of More Revenue
COLOMBIA · Report · 16 Jul 2014

Executive Summary The plan to phase out the financial transactions and net wealth taxes in 2015, combined with a projected fall in oil production, could force Colombia to seek financing alternatives. The loss of the two taxes will create a 2015 revenue gap equivalent to 1% of GDP, on course to ri...

GDP Growth in Q1
COLOMBIA · Report · 02 Jul 2014

The Colombian economy is off to a good start this year as GDP expanded by 6.4% in Q1 (Graph 1), the highest growth rate since 2011. Most analysts – ourselves included – have had to revise their forecasts upwards. The main driver of growth was construction, contributing 1.5 pp to total GDP growth....

Down with the Monarchy
COLOMBIA · Report · 20 Jun 2014

Executive SummaryThough he will remain a powerful force in forthcoming regional elections, and carry the banner of the opposition in an eventual referendum on a peace agreement, for Alvaro Uribe Santos’ reelection signals the beginning of the end of a political era. A second important message fro...

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