The Colombian economy lagged expectations in the first quarter of 2023 as the steepest interest rate hikes in history dampened investment.
(See: Colombia’s GDP grew 3% in the first quarter of 2023).
The Gross Domestic Product (GDP) expanded by 3% in the first three months of the year compared to 2022, said the National Administrative Department of Statistics (Dane).
The economists surveyed by Bloomberg they anticipated a growth of 3.4%.
The economy expanded by 1.4% compared to the previous quarter.
The Bank of the Republic forecasts the slowest growth since the covid-19 pandemic during 2023, which could allow policymakers to consider interest rate cuts as inflation slows toward its target.
The finance minister, Ricardo Bonilla, He said that he foresees that the Issuer can discuss interest rate cuts in the second half of 2023.
Growth and inflation cool in most of Latin America, but Colombia and Mexico are the only major inflation-targeting economies in the region that have not yet halted interest rate hikes.
(See: The ABC’s of 3% Economic Growth: Influencing Factors).
The Banco de la República raised borrowing costs by 11.5 percentage points over the last year and a half to 13.25%, the highest in almost 25 years.
Inflation slowed to 12.8% last month, after reaching its highest level since 1999 in March.
The central bank targets annual consumer price increases of 3%.
Bloomberg
