Colombian economy 'on road to recovery,' says Cárdenas

The World Bank's latest Global Economic Prospects report received a positive reception in Colombia.

Finance minister Mauricio Cárdenas (pictured) said the bank's forecast of 2.9% GDP growth for Colombia this year "bolsters our belief that the Colombian economy is on a clear path to recovery."

The 2.9% growth estimate is higher than the government's projection of 2.7%, but is lower than the World Bank's June forecast of 3.1%.

"A reason for the optimism, a good outlook, a good forecast made by the World Bank in terms of growth for this year, beating expectations and, above all, showing that a recovery is coming and will be sustained, because for 2019 they expect even faster growth," Cárdenas said.

The World Bank expects Colombia's economy to grow at a pace of 3.4% in 2019.

"Growth in Colombia is expected to pick up through the forecast period as moderating inflation supports private consumption, export growth recovers on rising oil prices, the 4G road infrastructure program is executed, and structural reforms to enhance competitiveness and foster diversification are implemented," the bank said in the report.

Annual inflation in Colombia reached 4.09% in 2017, down from 5.75% in 2016. The central bank's target range is 2-4%. Analysts questioned for the central bank's latest quarterly survey forecast that annual inflation will come in at 3.5% this year.

Colombia's economy has been hit by a fall in the price of crude oil, a key export. National oil production is holding relatively steady after some major output dips over the past few years. In December, S&P lowered Colombia's credit rating one notch to 'BBB-' citing stagnant GDP growth in 2017 and "revenue underperformance" from the 2016 tax reform.

The OECD and the IMF both forecast that growth for 2017 will come in at 1.7%. The IMF expects GDP to expand 2.8% this year and 3.6% in 2022.

WHAT DOES THE WORLD BANK SAY ABOUT THE REGION?

The World Bank forecasts that the regional economy returned to growth last year after contracting in 2015 and 2016. It expects that GDP growth reached 0.9% in 2017 and that the expansion will accelerate to 2.0% this year, 2.6% in 2019 and 2.7% in 2020.

The World Bank said regional growth will be driven by private consumption and, to a lesser degree, investment.

"Growth is expected to accelerate during the forecast period, reaching 2.7% in 2020, as conditions in commodity exporters improve further. However, the materialization of several downside risks could derail the recovery. They include economic spillovers from domestic policy uncertainty, additional disruptions from natural disasters, negative spillovers from international financial market disruptions or a rise in US trade protectionism, and a further deterioration in fiscal conditions.

Regional powerhouses Argentina, Brazil and Mexico are expected to post growth of 3.0%, 2.0% and 2.1%, respectively, this year.

THE 10 LEADERS OF THE 2018 GROWTH PACK (WORLD BANK FORECASTS)

Panama: 5.6%

Dominican Republic: 4.9%

Nicaragua: 4.4%

Paraguay: 4.0%

Bolivia: 3.8%

Guyana: 3.8%

Peru: 3.8%

Costa Rica: 3.6%

Honduras: 3.6%

Guatemala: 3.4%