Low oil prices are widening Colombia’s current-account deficit, dampening the confidence of foreign investors and dragging down the economy.
As a result, growth in one of Latin America’s most dynamic economies is slowing. In 2016, Colombia’s GDP is expected to expand between 2.5% and 3%, from an estimated 3.3% in 2015 and 4.6% in 2014.
A positive development could come, however, from the impending announcement of a peace deal with the Marxist FARC rebels, which is expected to be concluded by March 23. According to a study by the country’s economic planning department, the historic peace agreement could add as much as 1.9% to GDP.
The study, published in December, looks at the experience of countries that ended past armed conflicts with peace deals. It points out that an agreement like the one in the cards with FARC, which would put an end to 50 years of guerrilla warfare, mainly affects confidence: that of domestic consumers and investors, and also foreign investors.
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