In its October world economic outlook update, the International Monetary Fund (IMF) projected the Colombian economy to grow by 2.8% in 2018 and 3.6% in 2019.
The figure for 2018 is slightly higher than the 2.7% gross domestic product (GDP) growth forecast the global organization made for the Andean nation in May, an upward revision that comes in contrast to the IMF’s overall expectations for the global economy.
While it continues to see expansion across the world, the winds of positivity have begun to change, with the body forecasting 3.7% global growth in 2018 and 2019 — down from the 3.9% it had expected six months ago.
Though this is the same global growth rate seen in 2017 — and higher than any year from 2012 to 2016 — global conditions currently look less rosy in terms of ongoing expansion.
“Last April, at the time of our last World Economic Outlook, the world economy’s broad‑based momentum led us to project a 3.9% growth rate for both this year and next,” Maurice Obstfeld, economic counsellor and director of the research department for the World Economic Forum, told the press. “Considering developments since then, however, that number now appears overoptimistic. Rather than rising, growth has plateaued.”
He described troubled waters ahead related to uncertainty from the United States’ continued push to raise tariffs on Chinese goods and the retaliatory action from Beijing. This is further straining already-slowed growth in China and having knock-on effects in both the Euro zone and other developed economies as well as emerging markets from Brazil to India.
“There are clouds on the horizon,” said Obstfeld. “Growth has proven to be less balanced than we had hoped. Not only have some downside risks that the last [World Economic Outlook] identified been realized, the likelihood of further negative shocks to our growth forecast has risen. In several key economies, moreover, growth is being supported by policies that seem unsustainable over the longer term. These concerns raise the urgency for policymakers to act.”
Unlike Colombia, which is enjoying a significant recovery this year following a nine-year-low 1.8% growth rate in 2017, the other largest economies in Latin America continue to struggle.
The IMF downwardly revised the 2018 growth rates of Brazil (to 1.4% in 2018), Mexico (2.2%), and Argentina (-2.9%) in this most recent update. This was a similar story across the emerging markets, with India, Turkey, South Africa, Russia, and Nigeria all facing negative revisions to their growth forecasts as well.
But Colombia is not alone in receiving good news from the IMF this week.
“Even if you look across the emerging market landscape and the frontier market landscape,” said Obstfeld, “it is not the case that there are downgrades everywhere or that all countries are doing badly … We have upgrades in the forecast for Chile, Colombia, Peru, Bolivia.”
He added that “it is a very mixed picture, but when you do have this sort of uneven growth and countries are not all pulling in the same direction, you do see less momentum than we were so excited about six months ago. Where things will go from here on in, we do not know.”