(Reuters) – Colombia’s economic growth will edge up to 4.4 percent in 2013, with inflation remaining within the central bank’s official target range, the International Monetary Fund said on Monday, but it warned of vulnerability to external shocks.
IMF staff, in a regular assessment of Colombia’s economic health, also said the Colombia peso appeared overvalued on a real exchange-rate basis by between 1.0 percent and 8.0 percent, though it said strengthening could reflect improvements in economic fundamentals.
“Colombia appears well positioned to address the important medium-term challenges facing the country,” the IMF board said in a statement. “Directors agreed that the broadly neutral policy stance planned for 2013 is appropriate, and that the 2013 budget is in line with medium-term fiscal consolidation plans.”
The South American nation weathered the global financial shocks of 2008-2009, and monetary policy has scope for further easing if growth is weaker than expected, the IMF said.
“Spillovers from the global turmoil have been limited so far. However, Colombia remains vulnerable to a sharp growth slowdown in trading partners, a steep drop in oil prices, or a sharp rise in global risk aversion,” it said.
With solid growth this year and inflation expected to remain around the mid-point of the central bank’s 2-4 percent target range, the IMF encouraged Colombia’s authorities to consider a more ambitious fiscal consolidation plan.
“Focused on increasing non-commodity revenue, (this) could help mitigate the appreciation pressure, build buffers against adverse commodity price shocks, and create fiscal space for improving public infrastructure,” the IMF said.