Fitch Ratings forecasts a modest 1.5% growth for Colombia’s economy in 2024, falling short of the economic boost needed for a credit rating upgrade. Lead analyst Richard Francis explained that substantial wealth creation and improved debt management are essential for an upgrade, emphasizing concerns over the potential financial strain of a poor rating.
Despite an average 4% economic growth in recent years, 2024 is projected to see only 1.5% growth, with a slight uptick to 2.8% in 2025. Key economic indicators, like a 33.5% decline in private investment, have raised alarm about the country’s credit rating taking a hit with growth below 2%.
Inflation and Fiscal Challenges in Colombia
Inflation remains high in Colombia, impacting purchasing power and consumption negatively. With inflation expectations above the central bank’s target and a fiscal deficit expected to hit 5.6% in 2024, concerns over public finances and the sustainability of increased spending without new revenue have also been highlighted.
Analysts stress the importance of adhering to fiscal rules and diversifying funding sources to prevent a further decline in Colombia’s credit rating, urging caution against relaxing fiscal rules amidst spending pressures.