A Vulnerable Economy
When a storm is approaching, it is better to be prepared, fix the leaks in the roof and reinforce the windows, as well as stock up on food and water. It is simple common sense that should also be applied to economic management, but it is not what the Government is doing in the current circumstances, and the consequences could be severe, especially for the poorest population.
TL;DR
- Colombia's economy is in a vulnerable position, ill-prepared for a potential global financial crisis.
- International factors like the war in Ukraine, sanctions on Russia, and trade policies have disrupted global commerce.
- Rising oil prices and the risk of a financial market bubble in Artificial Intelligence further increase the probability of a crisis.
- Colombia faces slowing growth, job losses, rising inflation, currency appreciation, and increased interest rates.
- Structural weaknesses include a worsening trade deficit (USD 16.5 billion last year) and a current account deficit potentially reaching 3% of GDP.
- The fiscal deficit is also a major concern, with a primary deficit of 3.5% of GDP and doubts about the government's proposed spending cuts.
- High international interest rates are needed to finance these deficits, and a global crisis could close off markets, leading to recession and increased poverty.
- The government is accused of worsening vulnerability by spending more on electoral campaigns, and presidential candidates lack credible proposals to address the deficits.