Colombian central bank chief Jose Dario Uribe reduced his estimate for economic growth next year to 4 percent from a previous projection of 5 percent because of turmoil from the worst credit crisis in 80 years.
Growth in consumer credit should slow from the current 15 percent pace, reducing economic growth, Uribe said in an interview with Bloomberg Television in Washington. He said the peso's 19 percent fall since Sept. 1 won't add significantly to inflation because the currency had been "extremely overvalued."
"It's important for the market to know that the macro- economic conditions are in place to lower inflation considerably in 2009 and 2010," said Uribe, who was in Washington attending the International Monetary Fund's annual meetings.
Annual inflation slowed to 7.57 percent in September, down from a seven-year high of 7.87 percent in August. The bank has acknowledged it is unlikely to meet its target inflation range of 3.5 percent to 4.5 percent this year.
Uribe said investment will remain at current levels of about 28 percent of gross domestic product next year, as companies take advantage of record profits and government tax incentives.
Recently eliminated capital controls will help Colombian companies weather the credit crisis, Uribe said. The central banker said he didn't expect Colombian companies to report the losses on currency derivative contracts that have been seen in Brazil and Mexico.
Colombia last week eliminated controls on foreign borrowing and foreign investment in fixed income securities imposed in May 2007, along with a 500 percent limit on the leverage financial institutions may attempt from investments in derivatives.
"Those who criticized the controls at the beginning, now thank us because they don't have to face this," said Uribe. (Bloomberg)
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