Colombia finds itself grappling with a severe economic downturn as its Gross Domestic Product (GDP) dipped into negative territory during the third quarter of 2023, revealing a contraction of -0.3%, according to data released by the National Administrative Department of Statistics (DANE).
This decline, the steepest since the 2021 onset of the coronavirus pandemic, has raised alarms within the government of President Gustavo Petro. The negative 0.3% contraction marks two consecutive quarters of negative growth, warning of an impending recession if this trend persists into the first quarter of 2024. Key economic sectors such as construction (-8%), manufacturing (-6.2%), and trade (-3.5%) experienced sharp deceleration, leading to concerns that the health of the Colombian economy is being impacted by the left-wing President’s mercurial narratives.
The Banco de la República, Colombia’s central bank, had initially anticipated a modest growth of 0.4% for the third quarter, in line with other forecasts. However, the DANE report has unveiled a deeper and more prolonged economic situation, prompting a reassessment of the country’s financial outlook.
September witnessed a 0.1% decline in the economy, as reported by the Economic Monitoring Index, with crucial sectors like industry, trade, and construction remaining stagnant. Exceptions included public administration (5.2%), artistic activities (4.9%), and mining (3.5%), which showed modest growth.
Finance Minister Ricardo Bonilla acknowledged the severity of the situation, advocating for increased public investment and interest rate cuts by the Central Bank. However, these proposals have also raised concerns among former ministers, congressmen, economists, and finance experts who fear that the Petro government may resort to boosting public expenditure to stimulate economic growth.
Economist José Antonio Ocampo, despite being appointed by Petro as the leftist government’s first Finance Minister, expressed skepticism about the proposed changes, particularly the decision to end the fiscal rule, deeming it “tremendously negative.”
José Manuel Restrepo, former Finance Minister during the administration of President Iván Duque, criticized Bonilla’s proposal to eliminate the fiscal rule. On social media, he emphasized that the government’s focus should be on accelerating the implementation of the budget rather than modifying existing macroeconomic policies.
Ex-President Iván Duque also broke his silence highlighting the concerns among Colombians that the leftist president’s “anti-business ideological agenda” is part of the root cause for the disturbing economic numbers. Duque warned that eliminating the fiscal rule could increase debt, impact asset values, and contribute to poverty. He emphasized the need to face the economic downturn by creating confidence, stability, and stimulating business development.
In response to the economic news, President Petro proposed during a military ceremony in Bogotá that “public investment must grow in Colombia” and shifted responsibility to the Congress of the Republic. And despite Finance Minister Bonilla describing the current situation as “really bad,” Petro embarked to the APEC summit in San Francisco and trip that also includes a meeting with Venezuela’s Nicolás Maduro in Caracas on Friday.
Having devoted much of his social media to criticizing Israel and Prime Minister Benjamin Netanyahu’s military offensive in the Gaza Strip, the DANE report marks yet another setback for Petro, and direct warning that unless the national government focuses on its domestic agenda, rather than attacking international allies, within three months, Colombia will officially enter a recession, and one that could further delay direct investment and confidence in the emerging market.
 takes a nosedive into negative territory during the third quarter of 2023.){kind=link}