The World Bank has positioned Colombia among the countries with the most moderate growth projections in Latin America and the Caribbean for the year 2024, according to its recent economic forecasts revealed before the first half of January. The country, which recorded growth of 1.2% in 2023 (a figure not yet official), faces a modest increase of 1.8% this year, marking a decrease compared to previous estimates from last October, which anticipated a increase of 2.1%.
Colombia is thus among the nations with the lowest growth in the region, being surpassed only by countries such as Peru, Chile and Argentina, which closed last year with contractions in their economies.
The World Bank expects the Bank of the Republic of Colombia to reduce interest rates later than other central banks in the region, due to persistent inflationary pressures. Although inflation has decreased, factors such as increases in public services and the transportation sector still raise concerns. These challenges, according to the World Bank, will impact the growth of private consumption and investment until 2025.
Sandra Fonseca, executive director of Asoenergía, warned about the possible impact on demand, suggesting that Colombians could face a cumulative increase of around $2.4 trillion in their energy bills between January and April 2024.
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Faced with this scenario, Alejandro Espitia, professor at the Pontificia Universidad Javeriana, highlighted the need for short- and long-term solutions. While a reduction in interest rates could counteract the slowdown, Espitia emphasized the importance of structural measures, such as investments in infrastructure to improve productivity.
The World Bank’s World Economic Outlook report notes that Latin America and the Caribbean experienced an economic slowdown in 2023 due to high inflation, restrictive monetary conditions, weak global trade and adverse weather events. Mexico and Brazil exceeded their expectations thanks to factors such as agricultural production and exports.
Globally, the World Bank warned of “precarious” growth following the pandemic, with projections indicating a decline from 2.6% in 2023 to 2.4% in 2024. The entity also highlighted that many developing economies could fall into a trap of debt and precarious access to food, hindering global progress. Geopolitical tensions in the Middle East are emerging as an additional risk to follow in international markets.
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