Itaú BBA - Macro Scenario – Colombia: A harsh reopening

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Macro Scenario – Colombia: A harsh reopening

August 7, 2020

The door to further easing is not closed, but upcoming rate decisions are set to be more data-dependent

For the version with all charts and tables, please open the attached pdf file

The Colombian economy continues to gradually reopen in cities that are less affected by COVID-19. Yet, on a national scale, Colombia is experiencing record-high caseload and deaths, leading to extended lockdowns in key cities, including Bogotá and Medellin. The evolution of the virus would be key to the pace of the recovery anticipated during 2H20. We expect a GDP contraction of 6.0% this year (+3.3% in 2019).

The central bank cut its policy rate by 25 bps, to 2.25%, and indicated that any further move would be data dependent. Given the extent of the recession and the benign behavior of inflation, we still expect one additional interest rate cut of 25 bps before year-end.

 

João Pedro Bumachar
Vittorio Peretti
Miguel Ricaurte

For the version with all charts and tables, please open the attached pdf file



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