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.
Economic growth in the country slowed to 1.8 percent in 2017. Private consumption adjusted to the one-off impact of the 3-percentage point (pp) VAT increase. Government consumption remained subdued due to continued fiscal consolidation efforts.
On the supply side, industrial production declined in 2017, primarily due to weak performance in the extractive industries, as gold, platinum and silver output plunged. Oil and gas production declined nearly 4 percent and refining output also fell. The manufacturing of textiles and beverages declined.
Financial and social services contributed the most to growth, while the agriculture sector expanded 4.9 percent as the effects of the El Niño phenomenon dissipated and the livestock sector expanded more rapidly.
Growth is expected to strengthen gradually over the 2018-2020 period, with growth accelerating to 2.7 percent in 2018, and further to 3.6 percent by 2020, supported by higher oil prices, stronger private sector demand, and a pick-up in implementation of the 4G infrastructure program. The 2016 structural tax reform is yet to reach its full domestic resource mobilization potential, as lower economic activity and delays in reforming the tax administration have weighed on revenues.
Further fiscal consolidation efforts are thus critical for creating fiscal space for the post-conflict related spending and keeping a minimum level of public investment, while complying with the fiscal rule. The rule requires that the Central Government deficit declines by 2.6 percent of GDP by 2022 to 1 percent of GDP, with the structural deficit declining by 0.9 percent of GDP to 1 percent. The continued compliance with the fiscal rule, instituted for the first time in 2012, shows that fiscal management remains strong.
Colombia's flexible exchange rate regime is one of the first lines of defense against external shocks. Consistent with the inflation-targeting regime, the flexible exchange rate acted as the main shock absorber, depreciating more than 70 percent between mid-July and early 2016, before appreciating slightly in 2017.
The current account deficit adjusted more than expected to 3.3 percent of GDP, as the terms of trade improved by more than 15 percent while external demand strengthened. The current account deficit is expected to remain below 3.5 percent of GDP, supported by higher oil prices, a gradual recovery in non-oil exports, and despite a marginal decline in oil production.
Inflation is expected to remain within the targeted range of 3 ±1pp, aided by prudent monetary policy, well anchored inflation expectations, and excess capacity.
Last updated: April 16, 2018