Colombian Economy Transition Quiz

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Questions and Answers

What are the two main reasons for the decrease in the current account deficit from over 6 percent in 2022 to below 3 percent in 2023?

Lower imports and strong tourism receipts, despite less favorable terms of trade (correct)
Lower imports and increased exports, resulting from favorable terms of trade
Higher imports and strong tourism receipts, despite favorable terms of trade
Increased exports and strong tourism receipts, despite less favorable terms of trade

What is the expected real GDP growth in 2024?

3.4 percent
1.3 percent (correct)
1.2 percent
3 percent

Inflation is expected to reach around 3 percent by the end of 2023.

False (B)

The Colombian economy has been well-advanced in reaching more sustainable levels, in part due to appropriately tight macroeconomic policies over the last two years.

True (A) Signup and view all the answers

Private consumption is expected to further increase in 2024 as households continue to deleverage and the labor market improves.

False (B) Signup and view all the answers

What is the main reason for the projected slight increase in the current account deficit in 2024?

recovery in imports Signup and view all the answers

What is the long-term target real GDP growth rate?

3 percent Signup and view all the answers

Match the following terms with their descriptions.

Inflation = A measure of the general increase in prices of goods and services in an economy over a period of time. Current account deficit = The difference between a country's total exports and total imports of goods and services. Total factor productivity = A measure of the efficiency with which inputs are converted into outputs in an economy. Fiscal rule = A government policy that sets limits on government spending and borrowing. Macroprudential policy = A policy designed to prevent or mitigate systemic risks in the financial system. Signup and view all the answers

What are two of the downside risks to the Colombian economy in 2024 and beyond?

intensification of geopolitical tensions and a stronger-than-expected El Niño Signup and view all the answers

Maintaining adequate buffers and a strong track record of policy implementation are essential to mitigating financial and economic risks.

True (A) Signup and view all the answers

The central bank is expected to keep the policy rate steady for the remainder of 2023.

False (B) Signup and view all the answers

Colombia's inflation rate is currently lower than inflation rates in most peer countries.

False (B) Signup and view all the answers

The Colombian central bank's inflation target is 3 percent.

True (A) Signup and view all the answers

What are the two key elements of enhanced communication which could help better anchor inflation expectations?

focusing on the inflation target level and the expected time horizon to bring inflation to that target, while recognizing risks and uncertainties Signup and view all the answers

Colombia's central bank has been hesitant to intervene in the exchange rate market due to recent volatility.

False (B) Signup and view all the answers

What is the primary goal of the IMF's Flexible Credit Line for Colombia?

To provide additional external buffers and enhance market confidence Signup and view all the answers

Colombia's national central government deficit is expected to increase to 5.3 percent of GDP in 2024.

True (A) Signup and view all the answers

Colombia's public debt is projected to decrease to 57 percent of GDP in 2024.

False (B) Signup and view all the answers

The Colombian central government plans to reduce fuel subsidies in order to save public resources and align with climate goals.

True (A) Signup and view all the answers

Private investments in Colombia are expected to continue recovering in 2024.

True (A) Signup and view all the answers

Colombia's banking sector is well-capitalized and liquid, with capital adequacy ratios above regulatory minimums.

True (A) Signup and view all the answers

The countercyclical provisioning framework for Colombia's banking sector is expected to be completely phased out by the end of 2024.

False (B) Signup and view all the answers

What two key areas should be the focus of Colombia's anti-corruption strategy, according to the text?

Areas where corruption is more likely to occur and ensuring continuous publication of comprehensive and easily accessible income and asset declarations of politically exposed persons Signup and view all the answers

The text suggests that providing public access to beneficial ownership information could help improve transparency and accountability.

True (A) Signup and view all the answers

What is the ultimate goal that Colombia aims to achieve with its energy transition and export diversification plan?

To secure longer-term sustainability and resilience Signup and view all the answers

Flashcards

Colombian Economic Sustainability

Colombia's economy is progressing towards a more sustainable level, shown by reduced inflation and external deficit.

Real GDP Growth (2023)

Estimated at 1.2% in 2023, a slowdown from post-pandemic highs due to reduced domestic demand.

Inflation (2023)

Decreased from a high of 13.3% y/y in March to 8.4% y/y in January 2024, despite regulated price increases.

Credit Growth (2023)

Moderated from 18% y/y in August 2022 to 3% y/y in December 2023 due to tighter policies and lending standards.