Colombia’s imbalanced recovery can’t be sustained

Colombia’s very strong post-pandemic recovery has come at the expense of a build-up of large macroeconomic imbalances and a period of below-trend growth is needed to reduce these vulnerabilities. The longer the adjustment process drags on, the higher the risk that the peso comes under renewed downward pressure. That would prevent inflation from falling back more markedly and force the central bank to keep monetary policy tighter for longer.

EM Drop-In (1^st June): We’re talking EM equity outperformance, monetary easing, and the potential for “friend-shoring” in our next EM monthly online briefing. Register here.