Colombia: South American country with highest economic growth in 2022 -World Bank

This Tuesday, the World Bank’s report “New Approaches to Closing the Fiscal Gap” was released, in which the entity indicated the economic growth projections for Latin American and Caribbean countries.

Regarding Colombia, the WB is projected to grow by 7.1%, placing it as the fifth country with the highest indicator in this region. Likewise, in South America, it is the country with the highest growth projection.

According to the publication, the country that will grow the most is Guyana (57.8%), followed by Barbados (10.5%), Bahamas (8%), and Saint Lucia (7.9%).

Thus, Colombia’s growth would be above Uruguay (4.8%), Argentina (4.2%), Costa Rica (3.3%), Brazil (2.5%), Ecuador (2.8%), Peru (2.7%), El Salvador (2.4%), Chile (1.8%), and Mexico (1.8%).

Another data provided by the WB is that Colombia will grow 2.1% in 2023 and 2.8% in 2024.

In the report, the entity explained that the Latin America and Caribbean region recovered certain normality with an expected growth of 3% this year in the context of high inflation that could last.

In April, the World Bank predicted a growth of 2.3% in 2022, which it now raises to 3%, due in part to the increase in raw materials prices due to the war in Ukraine, which benefits exporters.

In most countries, gross domestic product (GDP) and employment regained pre-pandemic 2019 levels, but projected growth rates could be described as “resiliently mediocre,” the World Bank says in its growth outlook for the region released Tuesday, October 4.

“Growth is mediocre, say what it is, but it is worth noting the progress we have made as a region,” chief economist for the zone, William Maloney, told AFP news agency, citing inflation in most countries not being above the 6% average (except in cases such as Argentina where it reaches almost 80% year-on-year), much less foreign currency debt than 20 years ago.

However, overall debt increased, and more reserves in central banks.

GETTING BACK ON TRACK

Despite the improvements, there are headwinds. The impact of the war in Ukraine is uneven but less than in other regions, the WB noted.

The bank downgraded, however, the growth forecast for 2023: from 2.2% to 1.6% due to higher interest rates, slower growth in the G7 and China, and an expected fall in commodity prices.

Maloney said that the more serious long-term problem is that “in five years we will be growing at around 2.5%,” or roughly the same as in the 2000-2010 decade.

He said that to promote growth, “get our act together,” improve education, train skilled labor, boost productivity, innovate and adopt new technologies.

The unwanted guest in the region is inflation, and it is not known how long it will last, says the WB, which notes that in most countries, it is below the rate recorded in the Organization for Economic Cooperation and Development (OECD).

The region’s monetary authorities “are doing a good job with inflation; I think it is manageable,” said Maloney, who is more concerned about debt, which increased by an average of 10 percentage points. “That is serious,” he says.

The WB estimates that Latin American countries could improve income tax collection, given that in most countries, only 20% of citizens pay personal income tax (in the United States, it is 80%).

The bank also considers that instead of raising taxes on the richest, who are the ones who invest the most, governments should strive to optimize spending.

With information from Infobae