President Iván Duque Márquez, began his presidential term on August 7th, 2018, and it will end on August 7, 2022. Duque, from the Democratic Center party, won the elections by achieving 53.95% of the votes (10,351,304 votes) while his rival Gustavo Petro reached 41.83% (8,024,697 votes). The main pillars of its government are legality, entrepreneurship, and equity, with transversal axes in terms of: infrastructure, environmental sustainability and innovation.
Duque has insisted on austerity and responsibility in the management of public resources during his term. The new president will also present a tax reform to the congress that seeks to take effect on January of 2019.
Colombia has weathered well the significant terms of trade shock faced over the 2014-2016 period. Economic growth decelerated gradually to an estimated 1.8 percent by 2017, with the soft-landing supported by sound macroeconomic policies and structural reforms undertaken in recent years. Over the last years the country underwent an important adjustment in the non-oil fiscal deficit in response to the decline in oil fiscal revenues of nearly 3.3 percent of GDP.
Growth is expected to accelerate at a gradual pace over 2019-2020, supported by stronger private consumption, a gradual recovery of non-oil exports, higher oil prices, and a pick-up in the implementation of the 4G infrastructure program.
Inflation has converged to the targeted range in early 2018. Well-anchored price expectations and weaker economic activity, prompted the Central Bank to reverse its monetary policy tightening, cutting the policy rate gradually by a cumulative 350 basis points to 4.25 percent by early January 2018. The policy rate has been kept at 4.25 percent since then.
Colombia continues to maintain a solid macroeconomic framework. Key components of Colombia’s macroeconomic framework include the adoption of a full-fledged inflation-targeting regime, a flexible exchange rate, a Fiscal Rule (2011) for the central government, and a Medium-Term Fiscal Framework. The solid macroeconomic framework also helps build buffers and strengthen resilience to external shocks, facilitating external and domestic economic adjustment to potential shocks.
The post-conflict reconstruction efforts could provide a boost to confidence, and support growth through increased investments, particularly in the agriculture and energy sectors. It would however also put additional pressures on spending, making continued fiscal consolidation efforts necessary.
The government has showed commitment to fiscal discipline, complying with the fiscal rule instituted in 2012, which helped maintain its investment grade credit rating since 2013. Going forward the outlook depends on the country’s ability to address existing structural bottlenecks, sustain fiscal reforms, and diversify its economy to sustain higher productivity growth.
Last Updated: Oct 04, 2018