According to the IMF’s World Economic Outlook (WEO), the global economy is recovering faster than initially anticipated. Emerging markets are expected to grow stronger than developed markets and Colombia is forecasted to perform well among its peers. Below is our summary of the WEO data from October 2021.
2021 GDP OVER PRE-PANDEMIC LEVELS (2019)*
The global economy is recovering faster than initially anticipated. Most emerging markets (EMs) will surpass their pre-covid GDP levels by the end of 2021. Western European economies will lag EMs, the USA and Canada. Colombia’s growth at 5% is slightly above average among EMs.
* GDP comparison using purchasing power parity (international dollars)
Source: World Economic Outlook – IMF- October 2021
AVERAGE GDP GROWTH 2023-2026
EMs are anticipated to expand quicker than developed markets (DMs). Southeast Asia (5.5%), Eastern Europe (2.7%), Latin America (2.4%), and ME&A (2.2%) will exceed developed countries’ (1.8%) average growth. Colombia (3.4%) is an outlier in Latin America, with anticipated growth slightly above average among EMs.
Source: World Economic Outlook – IMF- October 2021
AVERAGE INFLATION 2023-2026
Inflation in Southeast Asia (3.3%), Eastern Europe (4.0%), Latin America (3.0%), ME&A (3.2%), and DMs (2.2%) is expected to remain under control, with the exception of Turkey. Colombia’s inflation is anticipated to be at the mid-point of the Central Bank’s target range.
Source: World Economic Outlook – IMF- October 2021
AVERAGE GROSS DEBT (% GDP) 2023-2026
Covid-19 resulted in most economies increasing their Debt-to-GDP levels by 10-20%. Debt-to-GDP is expected to remain much lower in EMs than DMs. Colombia’s is expected to trend downwards starting in 2023.
Source: World Economic Outlook – IMF- October 2021
AVERAGE FISCAL DEFICIT (% GDP) 2023-2026
Both DMs and EMs saw a hike in their fiscal deficits in order to withstand the effects of the pandemic. Post-Covid, EMs (2.8%) are expected to have fiscal deficits below that of DMs (4.7%). Colombia’s is expected to remain average among EMs.
Source: World Economic Outlook – IMF- October 2021
AVERAGE CURRENT ACCOUNT BALANCE (% GDP) 2023-2026
EMs with excess current account deficits will continue to experience weak currencies. Colombia’s current account deficit is a drag on its currency, even though the currency is considered undervalued.
Source: World Economic Outlook – IMF- October 2021
CAGR WORKING AGE POPULATION 2023-2026
Working age population is expected to grow in ME&A as well as in Latin America, while shrinking in Eastern Europe and most DMs. This age group is projected to continue to increase in immigration friendly countries like Canada, US and UK. Colombia’s positive working age population growth bodes well for consumer spending and real estate.
Source: OECD Stats - October 2021
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