Colombia’s economic rating improves

Colombia’s economic rating was upgraded Monday due to a favorable medium-term growth outlook.

The Dominion Bond Rating Service (DBRS) lifted the ratings for both Colombia’s long-term foreign currency debt and long-term local currency debt from the lowest investment-grade level BBB- to the slightly higher BBB. The DBRS cited structural reforms, improved security, and improved fiscal performance as the primary reasons for the lower rating.

The outlook for both trends have also been upgraded from stable to positive. The DBRS’s report noted that Colombia’s GDP grew an estimated 5.8% in 2011 and predicted that it will grow by another 5.0% in 2012.

“The ratings are underpinned by Colombia’s sound macroeconomic management and demonstrated ability to weather adverse shocks,” the DBRS revealed on their website.

This trend could still be reversed, noted the DBRS, particularly if pressures from a declining Euro area, a possible slow-down in China, or Colombia’s high unemployment are not dealt with properly.

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