BOGOTA, Aug 4 (Reuters) - Colombia’s economic growth will recover to close to 4.1% in 2021 after a recession this year, the country’s central bank said, amid uncertainty about when economic activity will return to pre-pandemic levels.
The Andean country’s economy has suffered as low oil prices and a coronavirus lockdown have shuttered businesses and sent unemployment soaring.
The central bank’s technical team places 2021 gross domestic product growth at between 3% and 8%, with a figure of close to 4.1% as the most likely, the bank said in its quarterly monetary policy report released late on Monday.
The bank has said the economy is set to contract between 6% and 10% this year, with a shrinking of 8.5% as the most likely scenario.
“The ranges reflect the high uncertainty that both the global economy and the Colombian economy are facing,” the report said. “The central scenario means the levels of economic activity observed in 2019 will not be recovered in 2021.”
The bank’s GDP estimates are considerably less optimistic than the government’s, which says GDP is set to contract 5.5% this year but will recover to 6.6% growth next.
A lack of inflationary pressures has allowed the central bank board to cut 200 basis points from the benchmark interest rate since March, taking it to a new historic low of 2.25%.
Consumer price increases will stay below the long-term target range of 3% in 2021, the report said, remaining around 2.5% during the second half of that year.
Inflation will begin to increase from the first quarter of 2021, it said, “in part because of lower comparative figures from the year before and the reversal of government economic relief.”
Excess capacity will remain high, unemployment will mean little pressure on labor costs and exchange rate pressures will be moderate.
The bank has predicted inflation will be between 1% and 2% this year, with 1.5% as the most probable figure.
($1 = 3,768.39 Colombian pesos)
Reporting by Julia Symmes Cobb and Nelson Bocanegra Editing by Nick Zieminski
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