Colombia’s external rebalancing: less than meets the eye

The sharp narrowing in Colombia’s current account deficit last year to its lowest level since the aftermath of the Global Financial Crisis looks encouraging, but it was entirely a result of the weakness of domestic demand. As the economy recovers, the external shortfall is likely to widen again presenting renewed downside risks to the peso.

In view of the wider interest, we are also sending this Latin America Update to clients of our FX Markets service.