Tendencia Económica No. 257

Abstract

Editorial: During 2025, the global economy has been characterized by a tightening of trade restrictions and growing uncertainty regarding changes in U.S. trade policy. This article examines the economic implications of the recent tariff escalation, particularly the measures announced on April 2 by the White House under the 'Liberation Day' framework, and their effects on international trade and the Colombian economy.

It is projected that, under this scenario, the growth of the United States and China would slow to 1.8% and 4.0%, respectively, while U.S. inflation would rise to 3.0%. For Colombia, it is anticipated that the increase in external inflation and the pass-through effects of an additional 3.4% depreciation of the exchange rate (4,341 COP/USD) will result in local inflation reaching 4.65% and the intervention rate of the Central Bank rising to 8.25% by the end of 2025. Additionally, goods exports are expected to fall by an additional 1.6 percentage points, and the current account deficit would widen from 2.7% to 3.2% of GDP. Finally, opportunities are identified to expand the country’s export potential in the medium term, particularly in the agricultural and industrial sectors, due to an improvement in the relative price compared to other emerging economies with higher effective tariffs and similar export structures, which would contribute to an increase of 0.2 percentage points in long-term economic growth.

Actualidad: Fedesarrollo projects a moderate recovery in growth, rising from 1.7% in 2024 to 2.6% in 2025, driven by a rebound in commerce, public administration, and some service sectors. Inflation is expected to decrease gradually, reaching 4.43% by year-end, although upward risks remain due to the anticipated depreciation of the exchange rate, which could range between 5.6% and 8.9%, placing it between $\$$4,300 and $\$$4,400, as well as rising costs of imported goods. On the fiscal front, a deficit of 4.7% of GDP is projected, contingent upon a budget cut of 1.7% of GDP; without this adjustment, the deficit would rise to 6.4%, again breaching the fiscal rule. The global context, marked by the trade war, would negatively impact Colombia through slower growth among trading partners, higher global inflation, increased risk premiums, and a decline in oil prices, which are projected to average $\$$66.9 USD/barrel in 2025, down from $\$$79.6 USD/barrel in 2024. This will likely exacerbate pressures on the exchange rate and international trade, leading to a widening current account deficit, which is expected to increase from 1.8% in 2024 to 2.7% in 2025. Lastly, fiscal risks, higher import gas costs, and external tensions may heighten inflationary pressures, hindering the pace of rate reductions and negatively impacting projected economic growth.