Colombia would not be immune to a slowdown in global GDP: scenarios it would face

Although the local economy started the year with pleasant surprises for investors and clear signs of recovery, recent changes in the outlook have led analysts and economic research centers to moderate their expectations , given that some believe the country will not be immune to the looming global slowdown.

This is evident in a recent analysis by Itaú Colombia, which notes that, if materialized, the effects of this impasse would be felt this year and in 2026. However, they emphasize that economic activity showed solid performance in the first months of the year, especially in the services and trade sectors.

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Carolina Monzón, manager of Economic Research at Itaú Colombia, explained that despite this positive step, the aftermath of Liberation Day, an event that marked renewed trade tensions and revisions to expected growth in major economies, led Itaú to update its projections.

"The bank now estimates a slowdown in global growth, cutting its forecast from 3.2% to 2.8%. This new international dynamic would have inevitable impacts on Colombia, given its dependence on trading partners such as the United States and China, both facing slower growth prospects," he indicated.

In this context, Itaú reduced its Gross Domestic Product (GDP) growth projection for Colombia in 2025 from 2.3% to 2.0%; while for 2026, the adjustment was also downward, dropping from an expected growth of 2.6% to 2.3%. All of this is based on the fact that the deterioration of the external environment, combined with other internal factors, will make it more difficult to achieve a growth path close to 3%, as previously considered possible.

"The impact of new tariffs will affect Colombian agricultural products, raising input costs and reducing potential export volumes. Furthermore, the drop in international oil prices, expected to be around $65 per barrel for Brent this year, represents an additional blow to export revenues and public finances," they noted.

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In its sector analysis, Itaú anticipates that services and trade will continue to be the main drivers of growth in 2025, although it warns that sectors such as agriculture could begin to moderate in the face of new challenges in costs and external demand. It also highlights that industry and construction are showing slower and delayed recoveries, with no clear signs of a rebound in the short term.

For this team of economists, the pressure will not only come from growth, as they are also concerned about the fiscal situation, especially given that the accumulated deficit as of February 2025 reached 1.7% of GDP, the highest level recorded in that period, driven by a 23.8% year-on-year growth in spending and a 1.1% drop in revenue.

As a result, the bank raised its forecast for the nominal fiscal deficit for 2025 to 7% of GDP, up from the previously estimated 6.5%. For 2026, a deficit of 5.5% of GDP is projected, also higher than the 4.6% initially projected. Regarding prices, Itaú acknowledges that inflation has shown a downward trend but remains high. It is expected to close 2025 at 4.5% and 2026 at 3.3%, although the bank warns that the recent increase in gasoline prices could add additional upward pressure.

Finally, regarding monetary policy, Itaú notes that the Central Bank of the Republic has opted to maintain the interest rate at 9.5%, reflecting persistent global uncertainty and inflation expectations that remain above the target. Given this scenario, the bank adjusted its projections for the reference rate, estimating a closing rate of 8.25% in 2025 (previously 8.0%) and 7.5% in 2026 (previously 6.5%).