Forecasts: how GDP and inflation would fare in Colombia in 2024, 2025 and 2026

The Colombian economy would grow 2% this year and accelerate in the next two to reach 2.8% in 2025 and 3.5% in 2026. driven mainly by domestic demand, says a projections report released by BBVA Research.

“Private consumption, especially in goods, and the recovery of investment in infrastructure and machinery will be the main drivers of growth, with investment in housing regaining momentum from mid-2025“, indicated the ‘Colombia Situation’ report of the Spanish banking group.

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In 2023, Colombia’s Gross Domestic Product (GDP) grew 0.6%, half of what overall projections indicated.

According to the bank document, The improvement in growth will be supported by lower inflation and the consequent drop in interest rates.

“Lower interest and inflation rates will contribute to economic recovery, improving the purchasing power of households and companies“, indicated BBVA Research.

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Colombia’s interannual inflation in August was 6.1% and the bank’s projections predict that the year will end “around 5.4%, supported by a low increase in food prices, the reduction of inflation in non-food goods, and a gradual slowdown in the prices of services“, according to the chief economist for Colombia at BBVA Research, Juana Téllez.

By 2025, inflation is projected to close at around 3.8% and in 2026 “will continue its downward trend, projected at 3.4%“, very close to the goal of the Bank of the Republic (monetary authority), which is 3%.

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With this perspective, BBVA Research considers “that the Bank of the Republic has room to accelerate the pace of interest rate reduction by the end of the year“.

At the end of September, the Bank of the Republic cut 50 points of the basic interest rate, which was set at 10.25%, precisely because of the downward trend in inflation.

“The monetary policy rate, which will close 2024 at around 8.5%, is expected to continue falling to reach 6.0% in 2025, and to remain at that level in 2026.“added the report.

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EFE