Colombia Economic Outlook. October 2022

Summary

The Colombian economy will enter a lower growth fase. Private consumption will stabilize at more sustainable levels in the medium term. Inflation will gradually moderate in 2023. The Central Bank will have space to start a gradual interest rate reduction cycle at the end of 2023.

Key points

• Key points:
• Global growth moderation is expected to continue in the midst of strong inflationary pressures and a more aggressive response by central Banks in developed countries.
• Economic growth in Colombia will stand at 7.6% in 2022, 0.7% in 2023 and 2.0% in 2024.
• Inflation will close 2022 at 11.8%, showing some signals of moderation that will consolidate in 2023, when it will close at 7.1%. In 2024, inflation will continue its reduction path to close at 4.5%.
• The Central Bank is close to the end of the hiking cycle, with a terminal rate near 11.0%. After this, at the end of 2023, the Central Bank will start a reduction cycle, based on the economic growth and inflation moderation.
• The Colombian economy will gradually reduce its macroeconomic imbalances, thought remaining at relative high levels being an important challenge for the country and a factor that could increase the exchange rate volatility.

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