Grupo Cibest (NYSE: CIB; BVC: CIBEST, PFCIBEST), the financial holding company that has owned Bancolombia since a 2025 corporate reorganization, has lowered its forecast for Colombia’s 2027 GDP growth to 2.4% from 2.6%, as an expected recovery in investment runs into fiscal adjustment, persistent inflation and a restrictive monetary policy. The annual outlook, Guía 2027: Colombia Resiste (2027 Guide: Colombia Endures), published this month, was prepared by the group’s Dirección de Investigaciones Económicas, Sectoriales y de Mercado (Economic, Sector and Market Research Department), led by Laura Clavijo Muñoz, and is accompanied by a spreadsheet of annual, quarterly and monthly projections with observed data updated on September 18, 2026.

The authors compare the country’s position heading into 2027 to an endurance test. They describe an economy that has absorbed several years of successive shocks, most recently the magnitude 7.4 earthquake of August 10, 2026, and now faces a macroeconomic environment the report calls complex but full of opportunities. Expectations are rising, the authors write, but the fundamentals are under review: the forces that drove growth are losing strength, public finances have deteriorated, and climate risks loom, among them what the report calls an aggressive El Niño.

The report’s central argument is that 2027 will be defined by two narratives running at the same time. One is a growing expectation of an investment recovery, driven by a friendlier environment for private capital, efforts to attract foreign direct investment and a rebound in lagging sectors such as mining and construction. The other is adjustment: inflation that will take time to converge, a monetary policy stance that remains restrictive, significant fiscal deterioration and structural competitiveness problems.

“The main economic story for the coming year will be the coexistence of two narratives: a push for investment and macroprudential adjustment.”

— Laura Clavijo Muñoz, director of economic, sector and market research, Grupo Cibest

Growth Forecast Trimmed to 2.4%

The revised 2.4% forecast follows growth of 2.6% in 2025 and an estimated 2.6% in 2026. The report presents the revision as the net result of opposing forces, which it quantifies as rounded percentage-point contributions to GDP growth. Better signals for investment would add about 0.3 points and post-earthquake reconstruction another 0.2 points. Against that, monetary policy restraint would subtract about 0.3 points and fiscal adjustment about 0.5 points.

The analysis sets out pessimistic and optimistic scenarios. In Grupo Cibest’s pessimistic scenario, 2027 growth falls to 0.9%; in the optimistic scenario it reaches 3.9%. The probability-weighted scenario sits at about 2.0%, below the base case. Over the medium term, the base case settles at around 2.7% a year from 2028 through 2030.

Grupo Cibest’s base-case GDP growth forecasts for Colombia, with pessimistic-to-optimistic scenario ranges (Chart: Finance Colombia, based on Grupo Cibest data)

Consumption Slows, Investment Picks Up

Household consumption remains the largest engine of domestic demand, but it is decelerating. Grupo Cibest projects private consumption growth of 2.2% in 2027, down from 2.7% in 2026, contributing about 1.7 percentage points to GDP growth. The report attributes the slowdown to the exhaustion of a buying cycle for durable goods, higher inflation, high interest rates, a rise in unemployment and more moderate growth in remittances. Real retail sales, which Grupo Cibest expects to grow 10.6% in 2026 on the strength of vehicle and technology purchases, would slow to 5.2% in 2027 as vehicle sales normalize and temporary stimulus such as the World Cup fades. New vehicle sales are forecast to fall 12.3% to about 285,000 units, after a 2026 that the report estimates will reach 325,000 units, the highest volume since 2014.

Government consumption would slow from 9.1% growth in 2026 to 5.2% in 2027, as Grupo Cibest expects the administration to trim operating and investment budgets. The adjustment has limits: the report estimates that 80% to 85% of public spending is inflexible, and reconstruction in the areas hit by the earthquake adds new spending needs. The public sector would still contribute about 0.9 percentage points to growth.

Fixed investment is where the report sees the turn. Grupo Cibest forecasts growth of 4.7% in 2027, up from 3.5% in 2026, lifting investment to 17.2% of GDP from an estimated 16.8%. The report cites expectations of a more favorable business environment, renewed mining and energy exploration and a recovery in business confidence, while warning that elevated interest rates will continue to condition investment decisions. Exports would accelerate from 1.0% to 3.1% on a corrected exchange rate, higher crude production, security gains and the end of the trade dispute with Ecuador, while import growth would ease from 6.9% to 5.8%.

Real growth by component of demand, 2026 estimate vs. 2027 forecast (Chart: Finance Colombia, based on Grupo Cibest data)

Construction Rebounds as Mining Accelerates

On the supply side, the largest swing is in construction, which the report expects to grow 4.3% in 2027 after two consecutive years of contraction (-2.7% in 2025 and -1.3% in 2026). Civil works would grow 7.8% in 2026 and 5.4% in 2027, driven by projects already under contract, including Bogotá Metro Line 1, a project the report sizes at $22.3 trillion COP, Medellín’s Metro de la 80, the Regiotram de Occidente commuter rail line and the Accesos Norte II road corridor. The report identifies annual fiscal space, not a shortage of projects, as the main limit on the next cycle: transportation accounts for $190.9 trillion COP, or 74.8% of authorized vigencias futuras (future-year budget commitments).

Residential building would recover more slowly. Grupo Cibest projects housing sales of 171,624 units in 2026 and 175,506 in 2027, but the ratio of housing starts to sales has fallen from 91% in 2024 to an estimated 68% in 2026 and would slip to 65% in 2027. Grupo Cibest expects the mortgage rate to fall from 15.2% at the end of 2026 to 13.9% in 2027, while 10-year government bond yields end 2027 near 13.3%, keeping long-term project financing expensive. Reconstruction adds a new source of demand: more than 36,000 homes were destroyed and about 206,000 damaged by the earthquake, according to the report.

Mining would accelerate from 1.3% to 2.4%, and agriculture would grow 1.6% after a 2.0% contraction in 2026, although El Niño would limit the recovery during the first part of the year. Entertainment and household services would be the fastest-growing activity in 2027 at 4.4%, down from 6.3% in 2026, while trade, transportation, lodging and food services slow to 1.5% and manufacturing to 1.0%.

The report’s macroeconomic chapter attributes the mining pickup to higher oil extraction, while its sector chapter describes Colombia’s hydrocarbons industry as being in structural decline. That chapter expects oil output to close 2026 at 734,000 barrels per day and fall 6.5% to 686,000 barrels per day in 2027, citing the natural decline of mature fields and insufficient drilling. Commercial natural gas production fell 17.1% in 2025 and another 11.6% between January and August 2026, while imported supply rose 45.8%, from 179 to 262 billion British thermal units per day (GBTUD) between 2025 and the year to date, a decline in domestic supply that has come alongside record-low gas reserves. The report estimates that imported gas contracted for the end of 2026 will cost 2.5 times as much as domestic supply. Its reserve and production figures draw on data from the Agencia Nacional de Hidrocarburos (National Hydrocarbons Agency, ANH) and the Unidad de Planeación Minero Energética (Mining and Energy Planning Unit, UPME).

Real value-added growth by sector, 2027 forecast vs. 2026 estimate (Chart: Finance Colombia, based on Grupo Cibest data)

The Earthquake: A Short-term Hit, Then a Modest Boost

The August 10 earthquake, centered near San José del Palmar in the department of Chocó according to the US Geological Survey, struck regions that account for about 15.5% of national GDP. Bancolombia transaction data cited in the report show consumer spending during the week of the quake ran 8.9% below its usual weekly level nationally and 26.7% below it across the most affected departments, with drops of 49.6% in Risaralda, 23.1% in Valle del Cauca, 22.6% in Quindío and 20.6% in Caldas. Spending recovered by the end of August, which the authors describe as a partial rebound rather than a return to normal.

The report estimates that emergency response, reconstruction and support programs will cost the government between 0.7% and 1.3% of GDP, raising the deficit in both 2026 and 2027. Multilateral financing may ease liquidity pressure but would add to debt. As reconstruction spending is executed, it would add about 0.2 percentage points to 2027 growth, provided energy and materials supply, logistics corridors and execution capacity hold up. Colombian insurers had recorded an estimated $3.7 trillion COP in earthquake claims as of September 7.

Unemployment Edges Higher

The labor market has been a pillar of household spending, according to the report. National unemployment averaged 8.8% between January and July 2026, down from 9.5% in the same period of 2025, and 9.0% in the main urban areas, down from 9.3%, according to Departamento Administrativo Nacional de Estadística (National Administrative Department of Statistics, DANE) data cited in the report, which credits remittances, the resilience of several sectors, migration flows and public-sector hiring. Grupo Cibest expects the urban unemployment rate for the 13 main metropolitan areas to average 8.3% for the rest of 2026, for an annual average of about 8.7%, and to rise to 9.1% in 2027 as labor-intensive sectors such as retail and manufacturing slow and fiscal austerity limits public hiring. Informality remains near 54% of the employed population, and the report warns that cumulative minimum wage increases could hinder formalization and that higher labor costs from the labor reform will pressure formal hiring in the short term, though it expects working conditions to improve over the long term.

The Fiscal Problem

The report identifies starting a deficit adjustment that limits the deterioration of public debt as the main challenge for 2027. The draft 2027 Presupuesto General de la Nación (General National Budget) and the updated financial plan from the Ministerio de Hacienda y Crédito Público (Ministry of Finance and Public Credit) raised the central government deficit forecast from 5.3% to 7.2% of GDP for 2026 and from 4.5% to 9.4% for 2027. The ministry’s estimates imply financing needs of $266.3 trillion COP next year, which the report calls historically high. Through July, the accumulated central government deficit reached 3.8% of GDP, one of the highest readings in 20 years.

The government has proposed an adjustment path that would cut the 2027 deficit to 7.4% of GDP, implying a reduction of $45 trillion COP (2.2% of GDP), and has said it intends to present a Ley de Rescate Económico (Economic Rescue Law) aimed at correcting the deficit. Those figures do not fully reconcile: lowering the deficit from the ministry’s 9.4% projection to 7.4% is a cut of 2.0 percentage points, not the 2.2% of GDP the report cites alongside the $45 trillion COP figure. Grupo Cibest expects spending rigidities and competition for resources to hold the cut closer to $30 trillion COP (1.5% of GDP). Its base case therefore puts the 2027 deficit at 7.9% of GDP, with a primary deficit of 3.0%, and gross central government debt rising to 68.1% of GDP in 2027 and about 72.8% by 2029. The report breaks the task into three separate stages: adjusting the deficit, ensuring debt sustainability and returning to the regla fiscal (fiscal rule).

Central government fiscal balance and gross debt as a share of GDP, base case (Chart: Finance Colombia, based on Grupo Cibest data)

Inflation Rises Again Before It Falls

Annual inflation reached 6.24% in August 2026, its highest level since July 2024, driven by indexation, labor costs, utility rates and food supply shocks. Grupo Cibest expects inflation to close 2026 at 6.7%, peak at about 7.3% in the first half of 2027 and end the year at 5.5%, still well above the upper limit of the target range set by the Banco de la República (Bank of the Republic, Colombia’s central bank). Grupo Cibest does not expect inflation to return to that range until the first quarter of 2028.

El Niño is the main reason for the first-half spike. The report cites the Climate Prediction Center of the US National Oceanic and Atmospheric Administration (NOAA), which assigns a probability above 90% to a very strong episode peaking in October through December 2026, and a 75% probability that it will exceed every event recorded since 1950. With hydropower accounting for about 62% of Colombia’s energy matrix, Grupo Cibest estimates that a strong episode could add 0.7 to 1.9 percentage points to annual inflation. Food inflation would peak at 14.2% in the second quarter of 2027 before easing to 7.4% by December, and regulated prices would peak at 10.0% in the first quarter before closing at around 7.5%. Services inflation would fall from about 6.9% to 5.0%, held up by rent indexation and a minimum wage increase above inflation, while goods inflation stays below 2.5% on the lagged effect of the peso’s appreciation.

The report lists five upside risks: a 2027 minimum wage increase well above inflation and productivity, higher fuel prices or regulated tariffs, a fiscal deterioration that raises the risk premium and weakens the peso, global trade and geopolitical tensions that raise freight and commodity costs, and a longer or stronger El Niño.

Rates on Hold at 12% Until Late 2027

The central bank’s board raised its benchmark rate by 275 basis points in 2026, to 12.00%, then held it in July. Grupo Cibest expects the rate to remain at 12.00% through September 2027, with cuts resuming only in the fourth quarter to end the year at 11.50%. The rate would fall to 9.50% by the end of 2028 and 7.50% by the end of 2029, converging toward 7.00% over the long term. The authors note that the projected 7.9% deficit narrows the room for monetary easing, and that policy would stay restrictive in real terms throughout the forecast horizon even without further board action.

Annual inflation and the Banco de la República policy rate, quarterly forecasts through 2027 (Chart: Finance Colombia, based on Grupo Cibest data)

For Títulos de Tesorería (TES, Colombia’s peso-denominated government bonds), the report expects the fixed-rate curve to steepen in 2027. Short-term yields would be anchored by the stable policy rate, with the one-year zero-coupon node falling from 11.98% at the end of 2026 to 11.26% at the end of 2027. Longer maturities would continue to carry a fiscal risk premium and absorb heavier issuance: the group projects the five-year and 10-year zero-coupon nodes at 12.40% and 13.30% at the end of 2027. Before that, it expects the 10-year node to rise from an August average of 12.5% to 13.9% by the end of 2026.

The Peso: Strength First, Then Fiscal Reality

The Colombian peso averaged 3,654 COP per US dollar in the first half of 2026 amid election uncertainty, then appreciated sharply after the presidential election on expectations of more private-sector-friendly economic policy, touching a low of 3,048 COP in the third quarter. Grupo Cibest forecasts an average of 3,417 COP in 2026, a 15.7% appreciation from 2025, and 3,331 COP in 2027. High oil prices, carry trade demand, remittances, international reconstruction aid and a sovereign risk premium the group expects to stay low as long as the government sticks to fiscal prudence would support the currency in the near term.

Grupo Cibest expects the peso to begin weakening in the first quarter of 2027, when the fiscal situation takes on greater weight in assessments of the country. Its base case has the peso ending 2027 at about 3,435 COP and weakening to an average of 3,756 COP by 2030. The scenario spread is wide: for 2027, the pessimistic case averages 3,620 COP and the optimistic case 3,040 COP.

Annual average USD/COP exchange rate forecast with pessimistic-to-optimistic scenario range (Chart: Finance Colombia, based on Grupo Cibest data)

External Accounts and Credit

The current account deficit widened to 3.5% of GDP in the second quarter of 2026 ($4.7 billion USD), its highest since the fourth quarter of 2022. Grupo Cibest projects the annual deficit at 2.5% of GDP in 2026 and 3.2% in 2027, driven by a larger goods trade gap and rising profit outflows from companies with foreign direct investment, with net factor income outflows increasing from 2.6% to 3.5% of GDP. Remittances, at about 3.4% of GDP, would cushion the gap, and the deficit would stay below its long-term average of 4.0% of GDP.

In banking, the group expects real loan growth of 2.1% in 2026 and 3.0% in 2027, with commercial lending gaining traction as the recovery consolidates and support initiatives for sectors such as infrastructure, housing, mining and energy take effect. Colombian banks posted a return on equity of 18.6% in the second quarter of 2026, supported by asset quality and investment income rather than loan growth, according to the report, which draws on data from the Superintendencia Financiera (Financial Superintendency). Credit has fallen to about 41% of GDP, its lowest level since 2014. The pension reform, scheduled to take effect in April 2027, could reduce flows into private pension funds by as much as 40% and, assuming current portfolio allocations hold, cut the monthly flows those funds direct into local equities and TES by close to 50% in 2027.

The Global Backdrop

The outlook assumes a gradual normalization of the conflict in the Middle East, which began when the US launched an offensive against Iran on the last day of February 2026. Grupo Cibest forecasts Brent crude averaging $90.4 USD per barrel in 2026 and $80.5 USD in 2027. It cites International Monetary Fund projections of global growth accelerating from 3.0% in 2026 to 3.4% in 2027, and expects US growth of 2.0% in 2027, with the Federal Reserve raising rates once more this year to a 4.00% to 4.25% range and then holding through 2027. Growth among Colombia’s main trading partners would slow to 2.1% in 2026 and 2027 from 2.2% in 2025.

Assumptions Behind the Base Case

The report links a better policy environment for hydrocarbons, construction, infrastructure and energy to new project flows, and it expects construction (including civil works), mining and reconstruction to carry much of the 2027 investment recovery. Its base case also rests on several assumptions: a deficit cut of about $30 trillion COP, smaller than the government’s own target; an El Niño that fades in the second quarter of 2027; and a peso that weakens gradually.

In the report’s analysis, progress on fiscal consolidation will shape the exchange rate and capital flows, the pace of interest rate cuts and the path of long-term bond yields. The authors describe 2027 as an ultramarathon run against the clock on irregular terrain and in extreme weather, and forecast a year of gradual recovery in which growth opportunities coexist with significant fiscal and inflationary challenges.

Headline photo: Office towers in Bogotá. (Photo: Image by bergslay from Pixabay)