Colombia Economic Outlook. Second quarter 2022

The Colombian economy will continue to show resilience in a context of greater global uncertainty, more contractionary monetary policies and strong upward pressures on inflation. We expect the economy to grow 4.5% in 2022 and 2.5% in 2023, driven by domestic demand and exports.

Key points

• Key points:
• The military conflict between Ukraine and Russia and the associated severe sanctions represent a significant supply shock, with negative effects on growth and on inflation, through the commodity, financial volatility, confidence and supply chain channels.
• Inflationary pressures are accelerated by commodity prices and bottlenecks. Central banks are expected to maintain focus on inflation and the process of withdrawing monetary stimulus.
• Colombia's GDP will grow 4.5% in 2022 and 2.5% in 2023. Domestic demand will continue to be important, with a positive impulse from private consumption and good investment dynamism.
• A moderate slowdown is expected for 2023. This was expected after an outstanding performance in 2021 and 2022, but also as a result of a contractionary monetary policy that will lead to a moderation in the country's private spending, especially household consumption.
• We expect the Central Bank to continue to raise its rate to around 8% in mid-2022, a level that will persist for several quarters. Its decision will be supported by good economic activity, current inflation pressures and higher price expectations going forward.