Bogota 2013 Blog: Colombia's Economic Outlook in the Global Landscape

By
Luisa Leme

What are the next steps to maintain economic growth in a recovering international economy? At the AS/COA Latin American Conference in Bogota, speakers answered this question

What are the next steps to maintain economic growth in a recovering international economy? At the AS/COA Latin American Conference in Bogota, speakers answered this question, explainig the context of Colombia's economic growth in the last year and debating what still needs to be done for the country to reach its potential. 

What's ahead for Colombia's economy depends on the international economy's progress, but the country's monetary policy, investments in infrastructure, and Colombian trade expansion could change this year's course.

The Bank of the Republic's Juan Pablo Zárate gave a presentation about Colombia's monetary policy in the context of today's world monetary and exchange rate scenario. Over the year, Colombia's monetary policy favored less exchange-rate appreciation, characterized by interest rates reduction and currency intervention, as the country increased foreign currency purchase, jumping from buying $20 million between June and July of 2012 to $37 million between February and May of this year. Zárate also added that there are positive fiscal incentives on the horizon, as it is expected that local governments in Colombia will spend more this year and that there will be housing market improvements due to government subsidy programs focused on reducing interest rates.

 

Colombia's Minister of Finance and Public Credit Mauricio Cárdenas celebrated Colombia's economic context and its advances in structural reforms. He addressed the country's economic situation in general, but also its exchange rate behaviour, and what's ahead in the country after its plan to boost productivity and employment (Plan de Impulso a la Productividad y el Empleo, or PIPE). His presentation demonstrated that interest rates for the Colombian housing market dropped after PIPE was announced this April. Cárdenas explained how Colombia's economy has given more hope to consumers and increased credit to companies while several sectors saw growth (coffee grew over 30 percent this year).

ANIF's Sergio Clavijo talked about economic growth and the main trading sectors in world's economy, giving a macro-economic context for Colombia trading potential. He also focused on Colombia record low unemployment rate and said that, for an economy the size of Colombia today "10.2 percent [unemployment] cannot be a satisfactory rate."