The International Monetary Fund on Friday cut its 2017 forecast for Colombian economic growth to 2.3 percent from 2.6 percent, citing political uncertainty and financial market volatility. The IMF's projection is below the government's GDP target of 2.5 percent for 2017.
"Risks include episodes of financial volatility and further declines in oil prices that could reduce fiscal revenues and lead to currency depreciation and inflation, while political uncertainty, both global and local, could damage confidence and delay investment," official Jorge Roldos IMF told reporters. He stressed that Colombia continues to gradually adapt to a combination of internal and external shocks. Roldos added that there is "certain" space for Colombia to gradually reduce interest rates.
Colombia's central bank in December began a cycle of lowering interest rates to alleviate the sluggish economy, which grew 2 percent last year compared with 3.1 percent in 2015.