Colombia's GDP is likely to hit a record high in 2021, analysts say ahead of official figures

Latin America's fourth-largest economy could have ended 2021 with record 10% growth after it contracted 6.8% in 2020

The city of Bogotá. Photo: Shutterstock

Colombia‘s economic growth probably slowed in the final quarter of 2021, but is expected to have hit a new annual record after authorities lifted coronavirus curbs and adopted expansive policies. That’s what analysts told Reuters.

According to the median forecast from 16 analysts, Colombia‘s fourth-quarter gross domestic product (GDP) is forecast to have grown 8.5% compared with the year earlier, slowing from 13.2% in the third quarter.

That would bring overall 2021 growth for Latin America‘s fourth-largest economy to a record 10% after it contracted 6.8% in 2020 during the worst of the pandemic’s economic impact.

The Andean nation’s growth was led by household consumption, with spending of savings accumulated during the pandemic, as well as strong fiscal spending and historically low-interest rates, analysts said.

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“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,” said Itau bank analyst David Cubides.

The government’s DANE statistics agency will publish the 2021 data on Feb. 15.

However, growth could slow to 4.1% this year, according to the poll’s median forecast, with high inflation expected to prompt the central bank to further raise interest rates to rein in prices.

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Additionally, the economy may also have to contend with lower fiscal spending and uncertainty ahead of the presidential elections on May 29.

“Undoubtedly, politics will be key to economic performance this year and there is a non-negligible risk that it could affect recovery, as well as the medium-term outlook,” Andres Pardo, the head of strategy for macroeconomics in Latin America for XP Investments, said. Pardo added, strong oil prices positive investment climate should underpin growth.

Colombia‘s economic growth is expected to slow further to 3.3% in 2023.

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