Economy
From The Report: Colombia 2019
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Colombia is poised for expansion in 2019 and 2020, despite some internal and external challenges that have not abated since 2018. Growth of the Colombian economy will be determined by which side of the scale advances further in the short term: strong consumer spending and increased investment in the construction sector due to the ongoing Fourth Generation road programme, or a deepening current account deficit and strained labour market due to the influx of Venezuelan refugees. As the country tries to advance its international competitiveness to secure greater investment and job growth, the government must battle inflation, unemployment and a fluctuating peso. Still, if the current National Development Plan is implemented successfully, the Duque administration is likely to leave behind a stronger Colombia with increased opportunities for all. This chapter contains interviews with Alberto Carrasquilla, Minister of Finance and Public Credit; Flavia Santoro Trujillo, President, ProColombia; and Juan José Echavarría Soto, General Manager, Banco de la República.

Articles from this Chapter

Overview

Small steps: Moderate growth is on the horizon amid strain from migrant populations and subdued commodity prices
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Colombia is poised for expansion in 2019 and 2020, despite some internal and external challenges that have not abated since 2018. Regionally, economic growth in 2018 outpaced giants Brazil and Mexico, but trailed the smaller, yet more dynamic economies of Chile and Peru. In May of that year Colombia was invited to become the 37th member of the OECD, a positive development that should increase the country’s international political and economic prominence in the coming decades. Challenges…

Interview

Maximising returns: Alberto Carrasquilla, Minister of Finance and Public Credit, on the medium-term outlook following recent fiscal reforms
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Interview:Alberto Carrasquilla In which ways is the recent fiscal reform likely to have an impact on the administration? ALBERTO CARRASQUILLA: The reforms seek to reduce the fiscal deficit from 3.1% in 2018 to 2.4% in 2019. We also aim to boost capital inflow through the management of trusts, lower spending and increase tax collection by 0.4%. We expect to raise COP7.1trn ($2.4bn) and our financial plan targets spending of up to COP4trn ($1.4bn), while continuing to maintain current levels…

Analysis

Part of the team: Colombia works to achieve policy objectives with the support of recent OECD membership
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In May 2018 member states of the OECD formally welcomed Colombia as the 37th member of the organisation. The country is the third nation in Latin America and the Caribbean to join the group, after Mexico and Chile. The OECD has traditionally been considered an organisation for developed economies, sometimes being referred to as “the league of rich nations”. However, Colombia’s addition as a developing economy was welcomed by Ángel Gurría, the secretary-general of the OECD, when he…

Interview

Breaking new ground: Flavia Santoro Trujillo, President, ProColombia, on foreign investment, trade, the creative industry and tourism
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Interview:Flavia Santoro Trujillo What is the country’s strategy to increase exports and foreign direct investment (FDI)? FLAVIA SANTORO TRUJILLO: Colombia’s investment and export promotion efforts are based off of five key pillars previously established by the Ministry of Commerce, Industry and Tourism (Ministerio de Comercio, Industria y Turismo, MINCIT): finding new sources of growth; increasing FDI; bolstering entrepreneurship; boosting productivity and innovation; and improving competitiveness. Efforts…

Interview

Resilient economy: Juan José Echavarría Soto, General Manager, Banco de la República, on the future of the banking sector
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Interview: Juan José Echavarría Soto What is Colombia’s current economic outlook? JUAN JOSÉ ECHAVARRÍA SOTO: Colombia can pride itself in having a resilient economy, with growth rates of around 3.5% annually over the last 30 years. Despite stagnant growth in recent years, we are progressively returning to previous levels, with an expected GDP growth rate of 3.5% for 2019. The inflation rate, which reached a high of 7.5% at the beginning of 2017, is also now progressing towards 3.2%. The stability…

Analysis

Fiscal stimulus: A tax reform package should spur hiring and investment, but may not help to close the public deficit
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Colombia began 2019 with a raft of tax and fiscal reforms designed to stimulate local and foreign investment, though there are concerns that some of the measures may hinder growth in the short to medium term. Headlining the changes in the Financing Law, which came into effect on January 1, 2019, is the progressive reduction of corporate income tax from 33% in 2019 to 30% in 2022, along with the repeal of a 4% surcharge on corporate earnings. It also provided for the repeal of the presumptive…