Colombia’s GDP Expected to Hit Record Growth of 10% in 2021

Colombian economic growth might be slowing in the last quarter of 2021, but it is expected to set a new annual record after authorities lifted coronavirus controls and took broader action.

Colombia’s gross domestic product (GDP) is expected to grow 8.5% year-on-year in the fourth quarter, slowing from 13.2% in the third quarter.

Overall growth in Latin America’s fourth-largest economy is expected to hit a record 10% in 2021, after contracting 6.8% in 2020 due to the economic impact of the Covid 19 pandemic.

The country’s growth is driven by household consumption, which is now spending the savings it accumulated during the pandemic. Added to this are high fiscal spending and record low interest rates.

Itau Bank analyst David Cubides said: “A favorable external environment, the absence of restrictions on mobility […] and expansive macroeconomic policies on the fiscal and monetary front would’ve supported a significant recovery in GDP in 2021.”

The state statistics agency DANE will publish the 2021 data on Feb. 15.

However, growth could slow to 4.1% this year as high inflation is likely to prompt the central bank to raise interest rates further to dampen prices. In addition, the economy could struggle with lower fiscal spending and uncertainty ahead of the May 29 presidential election.

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