The rating agency expects GDP growth to be just 1.5% in 2024, but believes it would rebound in 2025 to 2.8%.

Fitch Ratings has confirmed this Wednesday Colombia's rating at 'BB+' with a stable outlook, taking into account, among others, the country's history of macroeconomic and financial stability, supported by an independent central bank with an inflation targeting regime and a currency of free floating.

However, the country's rating is limited by high fiscal deficits and uncertain prospects for consolidation needed to ensure a stable debt-to-GDP ratio. Likewise, a high interest burden and a high dependence on raw materials also weigh on the country's solvency score.

The rating agency expects GDP growth to be just 1.5% in 2024. Domestic demand remains weak due to continued tight monetary policy, as rates remain high despite the start of the cutting cycle of the central bank. All in all, Fitch expects growth to rebound in 2025 to 2.8%, as less restrictive monetary policy drives greater consumption and investment.

Fitch believes growth will reach a trend pace of 3% in 2026, but uncertainties remain over trend growth given the decline in investment, which Fitch believes will remain below historical levels over the period.

For its part, Fitch expects inflation to continue declining to 5.8% by the end of 2024, still above the upper band of the central bank's target, and to fall below the upper limit of the target range by the end of 2025.

A sustained deterioration in the public debt-to-GDP ratio or a worsening of medium-term investment and growth prospects are two of the factors that could lead to a downgrade action.

On the contrary, achieving greater credibility in fiscal policy and sustained economic growth, above historical averages and accompanied by broader macrofinancial stability, could mean an increase in Colombia's solvency rating.