LatinNews Daily - 24 March 2023

In brief: IMF hails Colombia’s transition to more sustainable growth path

*The International Monetary Fund (IMF) has issued a new statement following the conclusion of an Article IV visit to Colombia, in which it said that the Colombian economy is “now undergoing a necessary transition towards a more sustainable growth path.” The IMF statement highlights that Colombia’s economy grew at 7.5% year-on-year in 2022; one of the fastest rates among emerging economies as it “benefitted from an effective policy response” to the coronavirus (Covid-19) pandemic and “highly favourable terms of trade”. The statement notes that against this robust recovery, high commodity prices, and weather-related shocks, headline inflation reached 13.3% year-on-year in February 2023 and the current account deficit widened from 5.6 in 2021 to 6.2% of GDP in 2022. It adds that downside risks persist and remain elevated but that “Colombia’s very strong economic fundamentals, policies, and policy frameworks support its resilience”. It also says that a “necessary” cooling of Colombia’s economy would help bring inflation toward the central bank’s target by the end of 2024 and narrow the current account deficit gradually to its historical average (about 4% of GDP). The IMF statement also highlights that a two-year flexible credit line of about US$9.8bn approved by the IMF in April 2022 has given Colombia “additional external buffers” and enhances the country’s resilience.

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