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Inflation continues on downward
trajectory as economy starting up slowly
In April, consumer prices rose 0.9%, which was up from 0.7% observed in
March but nevertheless lowered the annual inflation rate to 5.6% from 5.9%
in March. Central Bank officials anticipate that the downward trend in
inflation will persist throughout the year, despite a higher probability
for more pronounced economic activity and the potential for upside
pressures on food prices resulting from the El Niño weather phenomenon.
The current annual rate is on the mark with the official target of 6%.
Monetary officials expect inflation to decline further in 2003 to a range
between 4% and 6%. Participants are beginning to reflect the improved
inflationary environment in their forecasts and lowered their forecasts by
0.3 percentage points from last month’s figure. Next year’s figure has
also experienced a downward revision. Despite the improved inflationary
setting, Consensus panellists expect that the combination of increased
economic activity and accelerated currency depreciation will prompt the
Central Bank to raise the benchmark DTF rate from its current historical
low 9.56% (6 May) by year-end.
Independent Uribe likely to face
second round vote
Alvaro Uribe Velez, the former Liberal Party member turned independent, is
expected to be the winner of the upcoming presidential elections on 26
May. However, Uribe’s margin of victory has diminished according to April
2002 polls and he may face a run-off election on 16 June. Uribe now claims
to enjoy the support of the majority of the Senate (55 of the 102 seats),
which would facilitate governance if he becomes president. Uribe still
remains well ahead of other candidates with 47.7% of total votes (down
from 59.5% in February). Liberal Party candidate Horacio Serpa continues
in second place with 27.4% (up from 24.0% in February). The remaining
candidates are well behind the two front-runners. Independent candidate
Noemí Sanin has gained additional support with 6.5% of the votes (up from
5.1% in February) but has been eclipsed by Luis Eduardo Garzón, a labour
union candidate and ex-president of one of the country’s largest labour
unions, the United Worker’s Federation (CUT, Central Unitaria de
Trabajadores de Colombia), who jumped from just 1.3% in February to 7.1%
in April.
Note:
The above text is an abridged version of the LatinFocus Consensus Forecast
briefing on Colombia. For more details please click here.
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