Colombia's Economy Bottoms Out After Complete Lockdown Collapse

Colombian merchants protesting against COVID-19 lockdowns (Source: Yonhap News)

[Asia Economy Reporter Yujin Cho] The Colombian economy, which experienced its worst downturn since 1975 due to the impact of COVID-19, is now recovering from the bottom.

Bloomberg reported on the 16th (local time) that Colombia's GDP growth rate in the fourth quarter of last year turned positive at 6%, surpassing market expectations of 5.7%.

The easing of lockdown measures by authorities as the spread of COVID-19 subsided led to a recovery in retail activity. The report stated, "Contracted consumer spending rebounded by 17.8%, driving economic growth," and assessed that the economy is "recovering from the worst slump in history."

Colombia experienced severe recession due to COVID-19 lockdown measures that lasted about five months from March to August last year. The hotel, tourism, travel, and service industries were particularly hard hit. According to the Colombian National Statistics Department, as a result, the unemployment rate reached a record high of 21.4% as of May.

Colombia, which became the 37th member of the Organisation for Economic Co-operation and Development (OECD) in 2018, maintained an average economic growth rate of 2.5% over the past three years until 2019. The economic growth forecast for last year was 3.6%, indicating continued growth, but due to the outbreak of COVID-19, it contracted by -6.8%.

Due to increased COVID-19 related expenditures and decreased tax revenues, Colombia's fiscal deficit surged from 2.5% of GDP in 2019 to 9% last year, and government debt rose sharply from 36% of GDP ten years ago to 68% last year.

The speed of economic recovery is expected to depend on the direction of negative factors such as contraction in consumption and investment caused by COVID-19 and rising unemployment rates.

Research firm Capital Economics stated that the economic recovery speed in the first quarter of this year could be slower than expected due to the reimplementation of controls in some areas amid the resurgence of COVID-19 at the beginning of the year.

Authorities also believe that a full recovery this year is unlikely as the spread of variant viruses continues. Leonardo Villa, Governor of the Central Bank of Colombia, predicted, "The Colombian economy will not recover to pre-COVID-19 levels until next year."

This content was produced with the assistance of AI translation services.