The growth estimate for 2025 has also been maintained at 2.8% and forecasts for 2026 have been included, when the Colombian economy is expected to expand by 3.5%, driven mainly by domestic demand.
BBVA Research has forecast that Colombia's Gross Domestic Product (GDP) will grow by 2% in 2024, which represents an upward revision of two-tenths of a percentage point compared to the latest forecasts from the Spanish bank's research department, released last June.
The growth estimate for 2025 has also been maintained at 2.8% and forecasts for 2026 have been included, when the Colombian economy is expected to expand by 3.5%, driven mainly by domestic demand.
Private consumption, especially in goods, and the recovery of investment in infrastructure and machinery will be the main drivers of growth, with investment in housing regaining momentum from mid-2025.
Lower interest rates and inflation will contribute to economic recovery, improving the purchasing power of households and businesses. Similarly, the progressive recovery of the labour market from next year, with deterioration expected until the end of 2024, will boost household spending.
INFLATION AT 5.4% IN 2024
Inflation in Colombia will close at 5.4% in 2024 and will fall to 3.8% in 2025, approaching the Banco de la República's target, driven by lower increases in the prices of food and non-food goods.
This moderation will be driven mainly by the fall in food prices, which have had very moderate increases in 2024 and will continue with this trend in 2025, which will alleviate inflationary pressures on the basic basket.
Inflation is expected to reach 3.4% in 2026. This decline will be supported by lower inflationary pressure in regulated sectors, particularly by the expected normalisation of diesel prices, following the increases planned for 2024 and 2025.
The unemployment rate will rise to 10.2% in 2024, then decline to 10.0% in 2025 and 9.7% in 2026, driven by the recovery of formal employment, especially in the private sector, which will strengthen household consumption.
DEVALUATION OF THE COLOMBIAN PESO
Finally, the Colombian peso is expected to experience a moderate devaluation towards the end of 2024, standing at around 4,220 pesos per dollar. This behavior will be driven by the expected reduction in the rate differential between the Bank of the Republic and the Federal Reserve, as well as by the deterioration of macroeconomic imbalances, both on the external and fiscal fronts.
Political uncertainty surrounding structural reforms and fiscal discussions in Colombia will also put pressure on the exchange rate.
By 2025, the devaluation of the peso will continue, with the peso projected to close the year at 4.265 pesos per dollar, driven by factors such as the persistence of a wider current account deficit and falling commodity prices, particularly oil.
However, a slight appreciation of the peso is expected in 2026, which is projected to close at 4.195 pesos per dollar, favored by an improvement in foreign direct investment (FDI) flows and remittances, as well as by a reduction in the fiscal deficit.
