Colombia will grow more slowly in 2010 than the region’s other main economies due to a slump in trade with Venezuela and a less expansionary fiscal policy, Colombian Central Bank Chairman Jose Dario Uribe said.
The Colombian economy is likely to grow by 2-3% in 2010, Uribe said, while the figure for 2009 will be close to 0%.
“The thing that might differentiate Colombia from the other countries in the region is the negative effect we feel from the fall in the Venezuelan economy and the close of trade with that country,” Uribe said in an interview published Tuesday in the Colombian newspaper Portafolio.
“In contrast to countries like Chile and Peru, we don’t have much room in 2010 for a counter-cyclical fiscal policy. I think these are the two the factors that make it very likely that during the year we will grow less than some of the biggest economies of the region,” Uribe added.
A “counter-cyclical” fiscal policy aims to smooth out the business cycle by running fiscal deficits during economic downturns and surpluses during booms.
Chile, Peru and Brazil will also benefit more than Colombia from a recovery in Asian economies, Uribe said.
Colombia’s economy contracted 0.2% in the third quarter from the same period last year, due to weakness in manufacturing, commerce and transport, the country’s national statistics agency, or DANE, said Monday.
Uribe said that Colombia’s third-quarter GDP figures had been lower than the Central Bank’s analysts had expected.
“With this figure, we expect the growth for the year will be very close to zero, though we expect it will be in slight positive territory,” Uribe said.
Colombian exports to Venezuela in October fell 70% to US$195 million on October 2008, after Venezuelan President Hugo Chavez said his country will substitute Colombian imports with products from other countries. (Dow Jones)