After reaching records levels on Monday, Colombia’s stock market has continued to tumble this week on concerns about the Greek economic crisis.
Colombia’s stock index, the IGBC, dropped below 12,000 points on Thursday, around a 5.5% fall from the record high of 12,697.7 reached on Monday, reports .
On Thursday alone, the Colombian market dropped 2.84%, the largest single day drop since November 2008.
The record high witnessed at the start of the week was attributed to the surprise announcement last Friday of an interest rate cut by Colombia’s Central Bank, bringing rates down from 3.5% to a new historic low of 3%.
“Although Colombia has seen a drop in the stock market and further [currency] devaluations, the economy is well prepared to confront this shock, and it presents no major worries at the moment,” revealed Minister Oscar Ivan Zuluaga.
The minister went on to explain that Colombia hasn’t been the only country affected by the Greek crisis, nothing that it has been “a difficult week for all international markets.”
According to some analysts, however, the Colombian economy, and most other international economies, could be further affected if the Greek crisis spreads to other European countries.
“The worst case scenario would be if Greece defaulted on its debts, that would be catastrophic, much worse than the bankruptcy of Lehman Brothers. In that sense, the entire world would be affected,” warned analyst Alberto Bernal of Bulltick Capital Markets,
The director of Fedesarrollo, a Colombian economics research organization, Roberto Steiner, added that “Obviously, if this [crisis] extends to other highly indebted economies of Europe, the impact could be very serious.”