The reactivation is running at full steam. The Colombian economy has drawn a vigorous, V-shaped rebound, and grew by 10.6% in 2021, after collapsing 7% in 2020 due to the ravages of the pandemic, according to official data from the National Administrative Department of Statistics (DANE), released this Tuesday. Both figures are historical. Last year’s is the largest increase in gross domestic product (GDP) in the country at least since the statistical authority keeps records, in 1975.
That surprising growth was driven by the commerce, transport, lodging and food service sectors, as well as the manufacturing industry, public administration, health and education, he explained in a Press conference Juan Daniel Oviedo, director of DANE. The entity also detailed its downward correction of the GDP figures for 2019, which went from 3.3% to 3.2%, and for 2020, which it revised from -6.8% to -7%, in what Oviedo described as “the strongest moment of contraction in the contemporary history of the Colombian economy.”
Before the pandemic, Colombia had only finished one negative year in the last half century (1999). Its economy has been distinguished by a resilience that has allowed it to continue growing even in the midst of major crises, such as that of 2008-2009.
The government of President Iván Duque, thirsty for good news to weather a prolonged popularity crisis in an election year, had anticipated double-digit growth the day before, based on projections by the Ministry of Finance. The president mentioned a figure above 10.2%, and even celebrated it as “the greatest economic growth in our Republican history.” His statements, in the middle of a tour of Europe, sparked criticism for not waiting for the official statistics.
“This reactivation has taken into account the support for the most vulnerable,” defended President Duque in a recent interview with EL PAÍS. “We have also taken measures to maintain the purchasing power of workers: throughout my presidency, the accumulated real increase in the minimum wage has been 11.6% compared to 11.3% in the eight years of the previous government and 9 .7% from 2002 to 2010. This shows that growth has had equity”, maintained the president.
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Before knowing the official figures, the International Monetary Fund (IMF) had already highlighted Colombia’s recovery last month, despite having lowered expectations for Latin America as a whole. In the region, Colombia’s growth is only below the current projections of the Organization for Economic Cooperation and Development (OECD) for Chile (12%), and is above Argentina (8%) or Mexico ( 5.9%).
“The Colombian economy has recovered remarkably, and it is expected to be one of the fastest growing economies in Latin America,” said Mathias Cormann, the secretary general of the OECD, last week when presenting an economic study on the country. South American. “The Colombian authorities adopted sound and well-defined policies in response to the pandemic that have paved the way for further structural reforms to achieve sustainable growth,” he added. The OECD also updated its projections for Colombia, and expects it to grow 5.5% in 2022, and 3.1% in 2023.
Observers agree that on this almost idyllic horizon there are at least two dark clouds looming: unemployment and inflation.
The unemployment rate, the traditional Achilles heel of one of the most stable economies in Latin America, soared above 20% after the first attacks of the pandemic in 2020, amid the strictest confinement measures decreed by the Government to contain the coronavirus. Since then, although employment has picked up, it has done so at a slower pace than economic activity. Last year closed with an unemployment rate of 13.7%, a reduction compared to 15.9% in 2020. The informality rate for 2021 reached 48.4%.
Concerns also point to inflation, which reached 5.6% last year – the highest in five years – and has a particularly harsh impact on the most vulnerable. The increase in the basic basket is suffered above all by people with less purchasing power, and Colombian inflation is largely explained by the rise in the prices of food and non-alcoholic beverages, which touched 20% in the last year . Some products have skyrocketed, such as potatoes (140.16%) or beef (34.86%). January’s inflation of 1.67% has only fueled fears. The great challenge continues to be that the good GDP figures are transferred to all layers of society.
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