Growth has rebounded in many sectors of the economy, with the notable exception of tourism and entertainment. Unemployment is already starting to see a moderate decline. After a fall of 8¼ per cent in 2020, GDP is projected to rise by 3½ per cent in 2021 and 3¾ per cent in 2022, helped by low interest rates and fiscal stimulus. Inflation will be contained, owing to substantial spare capacity.
Macroeconomic policies have responded to the crisis in a bold and timely manner. Additional healthcare spending, income support to households, wage subsidies and extended credit lines have been facilitated by a temporary suspension of the fiscal rule. Public debt will rise substantially, but will remain manageable under the authorities’ plans, which include higher revenues and spending cuts from 2022. Monetary authorities have provided ample liquidity, with interest rates reduced to record lows. Fostering formal employment through lower payroll taxes will be key to raise productivity and make growth more inclusive.
Colombia has made good economic and social progress over the last two decades. Sound macroeconomic policies boosted confidence, which together with favourable demographics and external conditions underpinned resilient economic growth. This has contributed to higher living standards, and, together with improving access to education and social transfers, brought significant social improvements. Poverty has fallen markedly in recent years, while progress in reducing inequality has been more muted. On 25 May 2018, Colombia was invited to become a member of the OECD.