2013-01-15 13:25:17 - Colombia Business Forecast Report Q1 2013 - a new country guide report on companiesandmarkets.com

We believe that Colombia´s economy will expand by above 4.0% growth rates in the coming years, characterised by improved macroeconomic conditions and an increasingly friendly business environment.

Private consumption, while moderating, will drive the majority of growth, although gross fixed capital formation (GFCF) will play an increasingly important role over the coming quarters.

The infrastructure, mining and hydrocarbons sectors are particularly well positioned for growth.

Major Forecast Changes

While we momentarily revised up our end-2013 central bank policy rate forecast from 4.25% to 4.50%, the central bank´s decision to cut its rate by 25 basis points (bps) to 4.50% in November 2012 encouraged us to re-adopt our previously held forecast. Indeed, with strong indications that Colombia´s central bank will remain dovish, we forecast a

 

 

25 bps cut to bring the rate down from 4.50% to 4.25% in 2013.

Key Risks To Outlook

Upside Risks: Elevated foreign investment inflows into the country following Colombia´s upgrade to ´investment grade´ by all three major ratings agencies could drive growth even faster than expected.

Downside Risks: A further deterioration in global growth could place downward pressure on energy prices, dampening demand for Colombian exports and reducing foreign direct investment (FDI).

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