Inflation and the rising cost of imports threatening further progress
Despite a number of challenges facing Colombia, the country’s economy is accelerating, growing by seven per cent year-over-year in the third quarter of 2022.
This level of growth has beat the expectations of many analysts, who estimated growth coming in at 6.7 per cent. With a growth of 12.6 per cent in the previous quarter, Latin America’s fourth largest economy has managed to grow 9.4 per cent this year.
MAJOR EXPORTER OF OIL AND COAL
The latest growth data released by Colombia’s national statistics agency, known as DANE reports that Colombia’s growth was largely driven by increased household spending and renewed activity in the ICT and entertainment industries. Mining grew by 2.5 per cent, while agriculture shrunk by 1.4 per cent.
Analysts blame climate change for the sharp decline in agriculture output. Colombia is a major exporter of oil and coal, but mining activity slowed down significantly in recent months largely due to the government’s refusal to issue new licences.
In spite of the positive economic run by Columbia this year, Nearshore Americas is reporting that economists have been warning that gross domestic product growth might slow down in the months to come, pointing to inflation and the rising cost of imports. These factors, they argue, are threatening to derail the economic progress being made.
Under a complicated economic climate, recently elected leftist President Gustavo Petro is gearing up to raise taxes to generate US$4.16 billion in government revenue annually for the next four years, aiming to use the money to fund social programmes. Analysts expect that the rising interest rates resulting from the sky-high inflation will inevitably dampen consumer spending.
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