Colombia President: Coronavirus to Cut 2020 Economic Growth; Fedesarrollo Foresees Feeble 1.2% PIB
Colombia President Ivan Duque announced March 27 that the Coronavirus crisis and the resulting quarantine of most of the population is likely to cut Colombia’s gross domestic product (“PIB” in Spanish initials) this year.
While late-2019 and early-2020 forecasts had indicated that Colombia seemed on track for around 3.5% PIB growth this year, Duque stated that “we are going from, perhaps, in the first quarter of this year — one of the best first quarters of the last 10 years — to a tough second quarter, painful.”
In the face of the current economic downturn, both government and the private sector must “prepare to see how we are going to make an economic recovery that is sustainable and that also allows us to live with this virus while a vaccine appears,” he added.
Employers in both the private and public sectors are going to have to adopt “best practices in terms of control in labor scenarios,” he said.
“I believe that this is going to change many policies within companies where we are going to need [body] temperature mediators [to detect fevers]; where do we go, if someone has symptoms, to know how to say to that person: look, stay at home while you get better,” he said.
Meanwhile, the global oil-price crash triggered by falling global demand and a market-share war between Russia and Saudi Arabia will hurt Colombian government oil-revenues temporarily.
“It’s natural for the price to fall due to lower demand, but deliberately trying to generate an oversupply [from the market-share war] leads to negatively impacting the world economy [and] seems to me an act of extreme irresponsibility,” he said.
Fedesarrollo Cuts 2020 PIB Outlook
Meanwhile, Fedesarrollo — Colombia’s leading economic think-tank – on March 27 cut its full-year 2020 PIB outlook for Colombia to 1.2%, down from its 3.5% 2020 growth forecast last December.
The “optimistic” scenario for Colombian PIB growth is 2.3% while the “pessimistic” scenario is a negative 0.4%, according to Fedesarrollo.
Colombian exports are likely to fall by 8.8% while imports would declined by an even steeper 15.8%, according to the forecast. Meanwhile, domestic consumer spending likely will dip by 2.2% and capital formation would fall by 11%, according to the latest forecast.