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Colombia’s economy is forecast to grow 1.8% in 2024, while inflation is expected to slow to 5%, paving the way for the central bank to cut its benchmark interest rate to some 8%, Finance Minister Ricardo Bonilla said on Thursday.

GDP growth for 2023 is expected to have reached 1.2%, he added, lower than the minister’s previous forecast of 1.8% late last year.
Latin America’s fourth-largest economy sputtered through the previous year, while inflation has remained persistently high, hitting 10.15% for the 12 months through November.

Inflation for the end of 2023 is expected to come in at around 9.5%, Bonilla said, a significant drop from the 13.12% recorded in 2022 but significantly greater than the central bank’s 3% target.

A Reuters poll last week revealed that analysts expect inflation in 2023 to have reached 9.43%.
«That inflation continues to decline slowly but surely means we won’t reach the (central) bank’s 3% goal in 2024; it will be reached in 2025,» Bonilla said.

Lower inflation would allow the central bank to cut the benchmark interest rate from its current 13%.
Since passing the initial fiscal reform at the beginning of 2023, Petro’s government has struggled to push through a trio of subsequent projects to reform health, pensions, and work.

Colombia’s government is only opening discussions concerning the fiscal rule – imposing limits on the fiscal deficit – which does not guarantee changes or plans to breach it, Bonilla said. The fiscal deficit goal for 2023 was 4.3% of GDP.

The country will continue issuing bonds and seeking loans but will try to push back some maturity dates to increase investments.