Colombia saw an unexpectedly high bounce in the economy in the third quarter of 2009, with a 2.5% growth in GDP, after drops in the first three quarters, which worked out as a 0.4% expansion over the entire year.
This recovery was driven by high public spending, according to Eurasia Group, which links the high spending to the fact that Colombia’s incumbent president Uribe’s political future was hanging in the balance throughout 2009 and early 2010, as the country waited to see if he would be allowed to change the constitution to run for a third term in power.
The statement from Eurasia Group follows the IMF’s positive comments in its annual report last week, that “Colombia is well-placed to confront the challenges posed by the still uncertain global outlook.”
The IMF forecasts 2.25% growth for Colombia in 2010, while the Financial Times reports that Fedesarollo, a think-tank, predicts 2% growth in 2010. The regional average is forecast to be 3%.
The collapse in trade with Venezuela, formerly Colombia’s biggest trading partner, is likely to continue to damage the economy throughout 2010.