Colombian GDP will grow by 2.9% in 2018, according to a new projection from the World Bank. While this is an improvement from the 1.8% estimated economic growth of 2017, it is a decrease from the 3.1% rate for 2018 that the global financial organization had projected for Colombia last June in a prior forecast.
Looking further ahead, the World Bank has predicted Colombian GDP to increase by 3.4% in both 2019 and 2020. The 2019 figure is the same level that the bank had forecast for the country last June.
In addition to improving domestic spending and other factors that will help spur growth, the World Bank cited the expected contributions from the ongoing investment and development of the nation’s massive “4G” road and highway overhaul project, which will pump tens billions of dollars into Colombia’s infrastructure for at least the next decade.
“Growth in Colombia is expected to pick up through the forecast period as moderating inflation supports private consumption, export growth recovers on rising oil prices, the 4G road infrastructure program is executed, and structural reforms to enhance competitiveness and foster diversification are implemented,” stated the World Bank in its “Global Economic Prospects” report.
On the negative side, it states that there is considerable risk throughout the entire Latin American region, with Colombia subject to uncertainty given the changing of the guard that will come to the Casa de Nariño with May’s presidential election. After President Juan Manuel Santos completes his second, and final, term in office, the transition presents “a short-term downside risk for growth,” according to the Washington-based organization.
Looking more broadly, Latin America and the Caribbean as a whole will experience a significant recovery this year, with 2.0% growth projected. This is up from the estimated 0.9% expansion seen in 2017, which was the first positive figure for the region since 2014.
With Brazil and Argentina still getting back on their feet after recession, this figure will continue to get better in the medium term, with the region projected to hit 2.6% growth in 2019 and 2.7% growth in 2020.
Still, the World Bank notes that government debt has “increased markedly” in key economies — including Colombia, Brazil, Mexico, and Argentina — even if the debt-to-GDP ratio has fallen in each case except Brazil.
Hitting these numbers will require a general recovery in domestic growth, however, as the organization says that growth in the United States and China is “projected to decelerate in 2019 and 2020” and that commodities prices are unlikely to prop up results as in the past.
“The baseline outlook of accelerating regional growth is supported by strengthening private consumption and investment, particularly in commodity-exporting countries in the region,” stated the World Bank. “Domestic demand is expected to respond to strengthening confidence, relatively low inflation and still supportive, if somewhat tighter, global financing conditions.”
Global GDP growth is projected at 3.1% for 2018 based upon ongoing recovery in investment, manufacturing, and trade. Within this, emerging market and developing economies will growth by 4.5%, according to World Bank projections, largely on the strength of better performance among commodity exporters.
“Although near-term growth could surprise on the upside, the global outlook is still subject to substantial downside risks, including the possibility of financial stress, increased protectionism, and rising geopolitical tensions,” stated the report.
(Credit: Ministry of Telecom and Mass Communications of the Russian Federation / Minsvyaz.ru)