Colombia GDP Rebounding to 3.3% in 2019, 3.5% in 2020: Fitch
Wall Street bond rater Fitch on November 14 issued a “stable” outlook for Colombian sovereign debt and simultaneously upgraded its GDP forecast to 3.3% growth in 2019 and 3.5% in 2020.
“Ivan Duque’s 2018 presidential election victory is expected to lead to continuity in the government’s monetary and fiscal policies, including abiding by its fiscal rule,” according to Fitch. “The new president also has pledged to enhance the business climate in Colombia.
“Growth prospects are consolidating towards Colombia’s medium-term growth potential of 3.5% after three years of underperformance (with average growth of 2.1% in 2016-2018). Higher exports, supportive consumption and higher investment are expected to underpin higher growth.”
On the other hand, “infrastructure projects related to the 4G [fourth-generation highways] rollout have witnessed several bottlenecks that have slowed their progress, representing downside risks to the growth outlook,” Fitch added.
Meanwhile, a proposed tax reform in Congress “is key to achieving the [government revenue] target as well as meeting spending pressures such as from the immigration crisis stemming from Venezuela, although higher expected oil revenues from Ecopetrol dividends will help,” according to Fitch.
However, “if the tax reform does not pass or is heavily watered-down, [then] we think the government would revise the 2019 budget passed by the Congress in October 2018 with significant cuts in budgeted capital expenditure,” Fitch concluded.
DANE: 3Q 2018 Rebound
On a related front, Colombia’s national economic statistics agency — Departamento Administrativo Nacional de Estadística (DANE) – on November 15 released its latest study on national economic indicators.
For the third quarter (3Q) of 2018, Colombia’s GDP (“PIB” in Spanish initials) grew at a 2.7% rate, up sharply from the 1.7% rate in 3Q 2017, DANE found.
Sectors showing relatively strong GDP growth (4.5%) in 3Q 2018 were public administration, defense, social security, voluntary pensions, health services and education, according to DANE.
Wholesale and retail commerce, vehicle repair, transport and warehousing, and hotel-and-restaurant services grew at a 2.6% rate, according to DANE. Industrial manufacturers meanwhile saw a 2.9% GDP growth in the latest quarter, the agency added.
In the mining sector, metals extraction grew by 14.3%, while oil-and-gas extraction rose 1.3%. However, carbon and lignite extraction declined by 4.1%, according to the agency.