Colombia’s economy likely grew 2.6% in the second quarter due to strong domestic consumption, despite above-target inflation. Analysts forecast 2.0% to 2.9% growth, slightly below the central bank’s estimate. Consumption and consumer confidence improved, driven by declines in interest rates and inflation, stimulating investment and credit demand.

Director of economic studies at Acciones y Valores, Wilson Tovar, attributed the growth to good demand dynamics in trade, agriculture, and the financial sector. Analysts maintain growth estimates at 2.6% for 2025 and 2.8% for 2026. Inflation risks and fiscal challenges may limit further growth and slow interest rate cuts.

Colombia’s central bank has only cut its benchmark rate once this year, keeping it at 9.25% despite calls for a 50 basis point reduction. Pantheon Macroeconomics’ chief Latin America economist, Andres Abadia, highlighted concerns over the fiscal situation and credit deterioration impacting investment in strategic sectors. Economic growth could remain fragile without clear fiscal policy signals.

Read more at Yahoo Finance: Colombia analysts see steady economic growth, but fiscal risks loom: Reuters poll