After Colombia experienced a strong year for economic growth in 2012, some experts have expressed more caution toward the country’s growth prospects for 2013.
“I don’t think the government will meet the goals they’ve set for 2013 in terms of economic growth,” University of the Andes Professor of Economics Marc Hofstetter told Colombia Reports.
Now the focus has shifted to what will happen in the case of a cool down for the emerging natural resource-rich economy.
Colombia’s central bank, evidently sharing such concerns to some degree, met in mid-February and decided to drop the interest rate down to 3.75%: the sixth cut since June of 2012. The bank made its decision largely in response to high levels of household consumption, a sluggish civil works sector, and the slump in GDP growth in the third quarter of 2012.
MORE: Colombia lowers interest rates 3.75%
Finance Minister Mauricio Cardenas nevertheless has kept a steady cool about the country’s economic outlook. Cardenas recently said that Colombia has entered “a phase of low inflation” that makes the economy ripe for policy makers to stimulate economic growth.
According to Hofstetter, the bank has taken the right measures to maintain the economy’s vitality, but adds that the bank could push those policies further than it currently is.
“The central bank will likely continue to reduce the interest rate and continue purchasing dollars,” said Hofstetter. “They could, however, be more aggressive than they are.”
Sources
- Interview with Marc Hofstetter (Professor of Economics at The University of the Andes)
- Interview with Jorge Bello (Researcher at Acciones y Valores)
- Colombia yields plunge on Fitch outlook, rate view; peso gains
- Economic Acceleration and Structural Reforms
- Output, prices, jobs
- GDP Historical Data and Forecasts