Colombia is not Brazil
Colombia’s GDP expanded 4.7 per cent in the first quarter from a year earlier, its slowest pace since 2010. That has led some to worry that Colombia might go the way of Brazil, where growth has fallen sharply from 7.5 per cent in 2010 to less than 2 per cent this year. But Colombia’s finance minister, Juan Carlos Echeverry is not concerned.
“We are not going to be like Brazil, we have been very careful about being over indebted, be it households or firms. And we don’t have an inflation problem. My problem with Brazil is whether we will get some sort of contamination coming from Brazil, because Brazil has a lot of weight on the region,” he said. “Besides, people are increasingly seeing Colombia as a standalone story, and there are a lot of Brazilians investing here now.”
“Our problem is not portfolio investment, it is FDI. This year we are expecting $17bn in FDI. That’s exactly what you want to have, especially during a worldwide crisis, you want to be a safe haven. So I cannot complain.”
In certain sectors, they face the problem of the appreciation of the peso. The Colombian peso has been reported as one of the world’s best-performing currencies to date this year.
The central bank has a nine-month dollar-buying program of $20m a day already in place that is scheduled to end in early November. But for Echeverry it doesn’t seem like enough. “I have asked the bank for $40bn. I see Mexico, I see Chile, I see Brazil and they have been doing much better in terms of the exchange rate, they have devalued more than Colombia. If they have done it, and they are as serious as we are, we should be able to do it without compromising inflation.”
To read the complete article, click here.
To hear Juan Carlos Echeverry speak about the future facing Colombia, click here.