2026/06/02 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
Stronger transfers and a narrower trade deficit kept the CAD contained in 1Q26. A USD 1.6 billion current account deficit was recorded in 1Q26, equivalent to 1.2% of GDP (USD 0.1 billion lower than in 1Q25) the lowest level in two decades. The deficit was below our USD 2.3 billion call. Smaller-than-expected trade deficit, strong transfers (equivalent to 3.2% of GDP) and a mild surplus in the services balance contained the CAD in 1Q26. With this outcome, the rolling 4Q current account deficit fell by 0.1pp from 4Q25 to 2.3% of GDP (1.7% in 2024). At the margin, our own seasonal adjustment shows the annualized deficit sits at a lower 1.6% of GDP, 1.6pp narrower than in 4Q25.
Exports dynamics improved, reducing the trade deficit. Exports increased 14.2% YoY during 1Q26 (+0.2% YoY in 4Q25), while imports expanded 10.3% YoY (+8.7% YoY in 4Q25). As a result, the goods trade deficit narrowed by USD 0.2 billion from 1Q25 to USD 2.9 billion. Meanwhile, the services balance dropped USD 0.1 billion from 1Q25 to a USD 0.4 billion surplus. Transfers reached USD 4.2 billion (up by USD 0.3 billion from 1Q25 and equivalent to 3.2% of GDP). Meanwhile, the income deficit reached USD 3.3 billion (2.5% of GDP; 2.8% of GDP in 1Q25).
FDI continues to fall short of covering the CAD. Direct investment into Colombia came in at USD 3.8 billion in 1Q26, USD 1.0 billion up from last year. Net direct investment reached USD 3.4 billion (a USD 1.4 rise from 1Q25), resulting in USD 8.1 billion for the rolling year, only achieving a 74% coverage of the CAD (61% in 2025; 129% in 2024). Finally, net foreign portfolio investments recorded a USD 1.5 billion inflow, equivalent to 1.2% of GDP during 1Q26 (USD 1.7 billion inflow in 4Q25; 1.3% of GDP).
Our Take: Despite continued growth in imports, exports are starting to recover. As a result, we have revised down our current account deficit (CAD) forecast to 2.5% of GDP (from 2.7% previously).