BBVA forecasts inflation in Colombia of 9% in 2023
BBVA Research has published its own research in which it carries out a series of Forecasts on the evolution of the economy in some Latin American countriesand with it its update for the month of March on Colombia, where the report points to inflation close to 9% by 2023.
Within the framework of the new macroeconomic situations, companies and governments are making new projection adjustments based on the new data. It is because of that BBVA Research believes that Colombia will end 2023 with inflation of 9% and not 7.3% as suggested by the International Monetary Fund at the beginning of February.
Forecast for total and relative inflation – Source: BBVA Research (March 14, 2023)
In this way, BBVA Research shows that year-on-year inflation closed at 13.3% on average, and that it will at least remain at those levels until August of this year, when they estimate it will begin to drop to 9%. Besides They add that by 2024 if things continue like this, inflation could close at 5%.
These estimates go hand in hand with the report from the International Monetary Fund, in which, on March 23, they celebrate the tightening of monetary policy, and that this is the course that the government must maintain in order to lower inflation. In this sense, they stated that “The Colombian economy is currently undergoing a necessary transition towards a more sustainable growth trajectory.”.
This update from BBVA Research is given with new data, namely inflation of 13.3%, the closure of 3 banks in the United States in less than 8 days, high inflation in a general wayand the expectation locally in the decision of the Central Bank to raise or maintain the interest rate that is currently located at 12.75%.
In the midst of this complex macroeconomic panorama, we must add the effects of the El Niño phenomenon, which is expected for this year in the New Granada country. In this context, the growth forecast made by BBVA Research in December 2022 is maintained, in which, according to its analysts, Colombia will grow by 0.7%, a little more conservative than the projections of the International Monetary Fund, which in February of this 2023, published an estimate close to 1.1%.
On that occasion, and if the forecasts prepared by the agency are achieved, Colombia would be behind Brazil and would become the country with the lowest growth in terms of GDP in the region.
Likewise, in these IMF projections on inflation, but with the updated data provided by this BBVA Research report, the country of New Granada would be in eighth place in the ranking in Latin America.
However, BBVA Research shows in its report how each variant of the Colombian economy will be affected, and based on this data, it updates the projections it had published on February 20 (graph below).
Inflation projection – Source BBVA Research (February 20, 2023)
This graph shows how inflation was estimated to start its decline around April of this 2023, but with the update that this projection has recently undergone, now it will not be until August that the decline in inflation will begin.
In this way, the data and projections are not absolute, so it is important to be aware of all situations that may influence the markets, such as: the announcement that is expected at the end of the month in Colombia regarding interest rates, which is an important point for the economy of that countryand may affect current and projected inflation rates.
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