Colombia’s central bank cut its 2009
economic growth estimate to a range of 1 percent to 3 percent as
the global financial crisis chokes consumer spending.
Policy makers lowered their forecast for economic growth
this year from as much as 4 percent as the global recession
undercuts consumer confidence, capital flows and exports, bank
chief Jose Dario Uribe said at the bank’s quarterly presentation
in Bogota today. He said 2008 growth probably slowed to about 3.2
percent, down from a November estimate of 3.5 percent.
Surging consumer demand in Colombia since President Alvaro
Uribe took office in 2002, pledging to make the nation safe from
drug-funded violence, helped drive the $172 billion economy in
2007 to 7.5 percent growth, its fastest expansion in three
decades. That expansion pushed consumer prices up 7.7 percent in
2008, the highest end-of-year rate since 2000, and above the
bank’s annual target of 3.5 percent to 4.5 percent.
Inflation will meet the bank’s target this year of 4.5
percent to 5.5 percent as food and oil prices decline, he said.
Consumer price increases will slow “significantly” in the first
months of the year to end 2009 at about 5 percent, said Uribe,
who heads the central bank’s seven-member board.
Policy makers raised the benchmark interest rate 16 times
from mid-2006 to a high of 10 percent last year in a bid to rein
in consumer prices. Reduced inflation will allow the bank to
continue cutting interest rates, Uribe said.
Demand for exports will fall this year from a year ago
although the drop in the value of the peso will help exporters as
products become more competitive overseas, Uribe said.
The peso has weakened 27 percent in the past six months, the
third-worst performance against the dollar among seven Latin
American currencies tracked by Bloomberg.
Colombia’s peso rose for the first time in five days,
climbing 0.5 percent to 2,527 per dollar at 2 p.m. New York time,
according to the Colombian foreign-exchange electronic
transactions system, known as SET-FX. (Bloomberg)