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Growth is projected to pick up as infrastructure projects, lower corporate taxes and higher oil prices will boost investment. Improving confidence and financing conditions will support consumption. As growth gains traction, unemployment will edge down. Social indicators are improving but informality and inequality remain high.
The accommodative monetary policy stance is appropriate. Fiscal policy will need to remain moderately prudent to ensure that the budget deficit declines gradually in line with the fiscal rule. Boosting productivity requires more competition, streamlining regulations and increased openness to trade. Further efforts to reduce labour market informality, by reducing non-wage labour costs, and gender gaps, by expanding the provision of childcare, would make growth more inclusive.
1. Terms of trade is defined as the ratio of export prices to import prices for goods and services.
Source: OECD Economic Outlook 104 database; and OECD Revenue Statistics database.
Economic Assessment of Colombia (survey page)