Colombia lowered its GDP growth goal for 2015 due to recent declines in oil prices and anticipated lack of foreign investment.
Colombia had hoped to reach a GDP goal of 4.8% for 2015, up from 4.7% from 2014.
The primary culprit for this shortfall is trouble in Colombia’s oil market.
“Surely we will be a little short of the 4.8 percent goal we have at this time, because obviously the scenario of oil prices is less,” said Mauricio Cardenas, Colombia’s Finance Minister.
Crude oil represents 6% of Colombia’s GDP and 16% of the government’s tax revenue.
Falling oil prices around the world have had a strong impact on Colombia, which relied on oil for 67% of its exports income in 2013.
MORE: Falling oil prices threaten Colombian economy
On top of that, Colombia has fallen behind in its barrel production for the year, providing even less to be sold at the depreciated prices.
MORE: Colombia oil production down 2.8 %; growing concerns over 2015 budget deficit
Colombian oil closed on Wall Street last week at its lowest level since 2009.
This signifies notable economic difficulties for a country already facing a deficit in its 2015 budget.
Cardenas, naturally, seemed hopeful that the current oil situation was not permanent, but stated that if it is then Colombia “will have to absorb it and adapt in some way, either with cost-cutting or revenue generation.”
Colombia is also expected to take a hit in the sector of foreign investments. It is expected that foreign investment in Colombia’s oil market will drop by $2 billion dollars for 2015.
This signifies an unfortunate possible trend for the next year, despite Colombia’s reputation as a growing economy, the fourth largest in the South American region.
Colombia’s GDP is expected to come in at 4.4% in 2015.
Sources
- Colombia bajará meta de PIB del 2015 (Portafolio)
- Colombia bajará meta de PIB del 2015 por caída de precio petróleo (Infolatam)
- Colombia Profile (The Economist)