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Colombia Country Risk Report Q2 2019

Colombia Country Risk Report Q2 2019

Key View:

Colombia will see real GDP growth accelerate in the coming quarters as rising real wages drive private consumption. The implementation of more business-friendly tax and regulatory policies will promote investment.

Congressional infighting and security challenges, notably an uptick in violent crime and the Venezuelan refugee crisis, will dominate Colombian politics in the coming quarters. President Iván Duque will attempt to pass popular reforms, including anti-corruption measures and stronger support for social services.

Colombia will see its fiscal deficit narrow modestly in 2019 following the approval of a modified tax reform bill. The bill, which sets lower targets for revenue generation than legislation previously proposed in October 2018, will likely trigger fiscal responsibility spending cuts in the 2019 budget.

The Banco de la República (BanRep) will likely raise its benchmark policy rate in 2019. Additional rate hikes by the US Federal Reserve in 2019 will be the major driver of BanRep's monetary tightening, with inflation remaining well within the 2.0-4.0% target range. Major Forecast Changes

We have revised our 2019 fiscal deficit forecast to 2.6% of GDP, from 2.7% previously, reflecting the changes implemented by tax reform legislation and spending cuts proposed by the finance ministry.

We have revised up our end-2019 inflation forecast to 3.4% y-o-y, from 3.3% previously. Colombia Country Risk


Executive Summary
Core Views
Major Forecast Changes
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Stronger Investment Outlook Will Support Colombian Growth In 2019
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Robust Export Growth Likely To Decelerate In Colombia
Outlook On External Position
TABLE: TOP 5 GOODS EXPORTS
TABLE: TOP 5 GOODS IMPORTS
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Colombian Central Bank Likely To Raise Rates In 2019
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Modified Fiscal Reform Bill Will Help Narrow Colombian Deficit
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
COP: Peso Set To Strengthen After H218 Dip
TABLE: EXCHANGE RATE FORECASTS
Colombia Country Risk Q2 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Contents10-Year Forecast
The Colombian Economy To 2028
Economic Diversification Will Boost Long-Term Growth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
2019 Unlikely To Provide Relief For Colombian Policymakers
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Lingering Challenges Will Test Colombia's Long-Term Stability
Operational Risk
TABLE: OPERATIONAL RISK
Conflict Risk
TABLE: MAIN ACTIVE TERRORIST GROUPS
TABLE: POLITICAL VIOLENCE RISK
TABLE: BUSINESS RESPONSE TO CONFLICT RISK
Transport Network
TABLE: ROAD RISKS
TABLE: RAIL RISKS
TABLE: PORTS AND INLAND WATERWAY RISKS
TABLE: AIR TRANSPORT RISKS
Global Macro Outlook
Volatility Feeding Into Slower Growth
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: COLOMBIA – MACROECONOMIC DATA & FORECASTS

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