Colombia’s economy grew 9.9% in 2021, according to World Bank estimates, which improved on a previous 7.7% projection for last year. However, the multilateral body worsened the forecast for 2022 to 4.1% from 4.2% and expects the Colombian economy to grow 3.5% in 2023.
It is the best projection of the world Bank among Latin American countries this year. Colombia is followed by Paraguay, with a growth of 4%, and by Bolivia, with an increase in GDP in 2022 of 3.5%.
According to the World Bank report, the progressive economic slowdown this year and next year in Colombia will come as the momentum provided by investment in the country last year fades, and as labor market conditions improve. “A fiscal reform plan approved in September, together with a fiscal rule reinstated following a two-year suspension due to the pandemic, provides a framework for fiscal consolidation in the medium term,” the World Bank states on Colombia.
In Latin America, the multilateral body says that the economic recovery was an estimated 6.7% in 2021, but it will also slow down in 2022 to 2.6%, and will once more take a small boost in 2023, with growth of the region’s GDP of 2.7%.
It indicates that this year’s recovery was driven by favorable external conditions and various events related to the pandemic. “The number of new covid-19 cases drastically decreased throughout the region during the second half of the year; however, they increased once more at the end of December, despite progress in the vaccination process, “says the World Bank.
“The world economy is simultaneously facing COVID, inflation and policy uncertainty; public spending and monetary policies are entering uncharted territory. Rising inequality and security concerns are particularly damaging for developing countries, ”said David Malpass, president of the World Bank Group. He added that “to ensure that a greater number of countries move towards favorable growth, concerted international action and a comprehensive set of policy responses at the national level are required.”
According to forecasts by the World Bank, the slowdown will respond to factors such as the tightening of fiscal and monetary policy, as well as the continuation of the delay in improvements in labor market conditions, and the fact that external conditions become less favorable.
Globally, there will be a slowdown until next year
The World Bank expects world growth to slow down notably, from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023. This is due to the “new threats derived from the variants of covid-19 and the rising inflation, debt and income inequality, which might jeopardize the recovery of emerging and developing economies ”. The spread of Ómicron indicates that the pandemic is likely to continue to hit the economy in the short term.
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