Relentlessly optimistic, Colombia lowers 2020 economic growth projection

Colombia’s finance minister lowered his country’s economic growth projection on Monday and admitted he had been overly optimistic about last year’s economic growth.

The government’s 2020 budget prepared by Finance Minister Alberto Carrasquilla at the end of last year presumed this year’s economic growth would increase to a 4% growth.

This was too optimistic, Carrasquilla told press on Monday when presenting the government’s financial plans for the coming year.

Instead of the budget’s 4%, the minister said that this year’s economic growth is more likely to end around 3.7%.

Carrasquilla admits last year’s miscalculations

The minister also admitted he had been wrong about last year’s growth, which he for most of 2019 insisted was going to be 3.6%.

Carrasquilla said Monday that this was more likely going to be 3.3% once the growth figures of the last quarters are in.

The minister may still be a bit optimistic as a central bank survey held in October indicated that Colombia’s economic economic growth would more likely end at 3.2%.

Consequently, last year’s fiscal deficit ended at 2.5% of the country’s GDP instead of the 2.4% projected by the minister.

The finance minister’s alternative economic reality

Analysts consulted by economic newspaper La Republica said that the minister continues to use projected growth figures that are considerably more optimistic than those used by independent analysts.

While Carrasquilla insisted that the economy is “on a rebound,” Credicorp Capital chief economist Daniel Velandia said that he expected a stagnation.

We think that even with this new figure of 3.7% there is a risk that it will not materialize because when you look at the surveys, they border on 3.2% and 3.3%.

Credicorp Capital chief economist Daniel Velandia

Carrasquilla’s relentless optimism

Despite the fact that the US dollar has gone from COP3,000 to COP3,395 over the past year, Carrasquilla estimated that the peso would recover value and that the dollar on average would be worth COP3,320 this year.

The minister also expected that Brent crude oil prices would recover and on average would be $60.50 per barrel despite the fact that over the past year Brent oil prices dropped from $61.98 to $54.81.

Notwithstanding the discrepancies between Carrasquilla’s perception of the economy and that of others, the finance minister said that, unlike this year, he would not end up with a higher-than-expected fiscal deficit, but with one of 2.2%.