Colombian economy, a cause for concern?
Colombian President Juan Manuel Santos will be concerned by today´s International Monetary Fund (IMF) 0.4 growth rate downgrade, which now forecasts a 4.3 rise until end 2013.
The IMF´s report follows news that exports are also down, around 4%, but nevertheless expects Colombia to outperform the regional as a whole which will see growth between 3. 2 and 3.9% over the coming 15 months.
Colombia is not entirely shielded from the effects of the sclerotic world economy, but it has been protected by among other things record foreign investment and high commodity prices.
Santos has placed economic competence at the heart of his government and his re-election depends both on this and on the peace talks.
Over a million 800 thousand new jobs have been created during the Santos regime, inflation has been kept low, and despite an increase in state spending, a healthy approach to deficit management has been enshrined in the constitution – a measure designed to avoid a crisis similar to that endured in Europe and North America.
The new finance minister, Mauricio Cardenas is currently taking a tax reform bill through parliament, a piece of legislation he says is designed to address inequalities in the tax code and to reduce the burden on businesses, helping to stimulate a further estimated one million jobs.
Santos´government has also, through `Prosperity for all´ social programmes, helped to lift 1.2 million out of poverty, the aim to take the figure below 40% of the population.
And in August, Santos promised that within two years – when his first term in office comes to an end – the rate of extreme poverty will be reduced to one digit.
Employment Minister Rafael Pardo has also sought to remove the informality of many Colombians´ employment, building on previous reforms that introduced favourable tax rates for new business incorporation.
Finally, the Santos regime has also placed free trade agreements at the heart of its foreign policy, working to kick-start the long-awaited Colombia – US FTA, and moving closer to finally signing a similar plan with the EU. Santos has been a globe-trotting president aiming to tie up agreements across the continents, not only to the north and in Europe, but also in Asia with China, Korea, and Japan all potential future trading partners.
Santos was given his first role in government by Cesar Gaviria (President 1990-94) the leader responsible for the famous ´apertura´or liberalisation of the Colombian economy, and is continuing the work of his old boss.
For now, although Santos will keep more than a watchful eye on the growth rate, he will hope that Colombia can weather the economic storm elsewhere and continue on its strong growth path.
What Santos will have to address if the economic future of Colombia is to be as bright as the wealth of natural and human resource means it should be, is the major lack of infrastructure provision. Santos has announced billions of investment to improve the road network, and has begun to talk of reintroducing a national rail network.
These improvements will make their mark, at the earliest, in Santos´second mandate, but most likely long after he has left power. His role in history will be judged as much on this issue as on his ability or otherwise to secure peace.