The Organization for Economic Cooperation and Development (OECD) downgraded Colombia’s expected economic growth prospects in 2016 and 2017 in its semi-annual Global Economic Outlook released on Monday.
The OECD, into which Colombia is currently seeking full membership, reduced expectations for Colombia to 2.1% and 2.5% projected growth in 2016 and 2017 respectively, before reaching 2.9% in 2018.
Colombia’s GDP growth rate
The projections are three tenths lower in 2016 and five tenths lower in 2017 than envisioned in the previous Outlook, published in June.
The OECD pointed to external factors such as weak international trade, uncertainties about US monetary policy and potential adverse developments in other emerging economies, particularly China and Brazil, which could increase “global financial volatility” as the reasons behind the reduced projections.
Despite the reduced projections, the report still expects improved economic prospects for Colombia in the next two years, due to stronger external demand and a recovered agricultural sector now that El Niño has ended.
The OECD highlighted the peace deal and a recent recovery in oil prices as further contributors to an improved economy.
To assist with the economic recovery, the report strongly endorsed President Juan Manuel Santos‘ “comprehensive tax reform”, saying that its approval by Congress is “crucial to raise revenues, boost growth and deal with social challenges.”