Colombia | Navigating global uncertainty

Summary

The global environment faces geopolitical risks and the onset of the Trump 2.0 administration. Although Latin America is no stranger to uncertainty, it has shown resilience. Colombia is recovering amid global and domestic challenges, with persistent inflation that led the central bank to begin a tightening cycle.

Key points

• Key points:
• Structural geopolitical risk has reached levels unseen since the 1960s, driven by the policies of the Trump 2.0 administration — tariffs and pressure on Venezuela, Iran, and Greenland — generating high volatility in global financial markets and a depreciation of the U.S. dollar against most currencies.
• The Fed is holding its policy rate at 3.50–3.75% amid resilient growth and inflation close to 3% in the U.S. Only two additional cuts are expected in the second half of 2026, bringing the rate to 3.00–3.25%, which limits policy space for emerging economies.
• Latin America is projected to grow by 2% in 2026, below the global average. Mexico (1.2%) is the most vulnerable to U.S. tariffs due to its high export dependence, while Colombia (2.8%), Peru (3.1%), and Paraguay (3.5%) show relatively stronger momentum.
• Colombia grew 2.6% in 2025, driven by private and public consumption, but with weak fixed investment and contraction in strategic sectors such as mining (-6.2%) and construction (-2.8%). Inflation, still at 5.4%, compels Banco de la República to begin a tightening cycle of up to 300 bps in 2026.
• Despite the challenges, Latin America and Colombia face real opportunities: trade agreements with Europe, green growth, competitive exports to the U.S., and foreign direct investment seeking new destinations in a geopolitically reordering world.

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