GDP is expected to grow at moderate rates of 1.5% in 2023 and 1.8% in 2024, after a prolonged recovery that lifted output above its potential. Consumption and investment will remain subdued given tight macroeconomic policies and a fragile global economy, especially in 2023. Headline inflation started to decline in April and is projected to continue to decrease to the target by 2025.
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Colombia’s economy has recovered remarkably well from the COVID-19 crisis, and strong ﬁscal and monetary policy support have averted a stronger contraction of incomes. Solid macroeconomic policy frameworks are laying the grounds for a continuous recovery of domestic demand, although the sustainability of ﬁscal accounts will require further action. In a longer view, however, both growth and social inclusion are trapped by weak structural policy settings that preclude more than half of income earners from formal jobs and social protection, while preventing ﬁrms from growing and becoming more productive. Solving this vicious circle through ambitious reforms would allow a signiﬁcant leap forward for material well-being in Colombia.
The pandemic is likely to lead to higher informality, inequality and poverty - reversing years of improvement. Low-quality basic and professional education often disconnected from labour market needs, large connectivity gaps and high regional inequalities need to be addressed in order to tackle informality and boost growth and employment in the medium-term.
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