Colombia: The economy, inflation and interest rates will continue to rise by the end of the year

In the first quarter, the Colombian economy grew 8.5%, higher than the most optimistic forecast. This result prompted economic analysts and experts to reconsider the forecast for the dynamics of the economy at the end of the year.

The economy is expected to improve significantly in the first semester, and in the second half of the year this will tend to moderate until closing out the year with a rebound between 5.5% and 6.8%.

Indeed, Banco de la República itself has increased its official forecast for a GDP recovery for this year. Now, the bank expects the economy to grow at a rate of 6.3%. Juan Pablo Espinosa, director of economic research at Bancolumbia, explains that the economy will tend to have a positive growth rate but will increasingly be contained.

According to the analyst, this will mainly respond to the fact that consumption will reach the stage of “exhaustion”, which will contribute less to GDP. This lower consumption will be due to factors such as higher inflation and an increase in the rate of central bank intervention.

Espinosa sees the economy growing by 5.4 percent in the third quarter and will continue to slow to 3.4 percent in the fourth quarter, so at the end of the year he expects the overall weighted figure to be 7.2 percent.

The good growth of the economy, as well as high inflation, led the Banco de la República to increase the interest rate. Since August, the rally started with the first increase of 25 basis points.