The Organization for Economic Cooperation and Development (OECD) has lowered Colombia’s 2025 growth projection to 2.5%, warning that downside risks persist despite moderate growth expected through 2026.
According to the organization, Colombia’s growth forecast was revised down from 2.7% to 2.5% for this year, and from 2.9% to 2.6% for 2026-still below pre-pandemic levels, according to its semiannual economic outlook report released. “The economy is expected to grow at moderate rates of 2.5% in 2025 and 2.6% in 2026, following a year-over-year expansion of 1.6% in 2024, the report stated, warning of “rising downside risks.”
These projections represent a 0.2-point downgrade for this year compared to the 2.7% forecast in the previous semiannual report released on December 4, and a 0.3-point cut from the 2% the organization has projected for 2026.
OECD’s economic projection for Colombia
“Investment will continue to recover from a drop below 17% of GDP, but uncertainty and a weakened housing market will prevent a full return to the pre-pandemic investment rate of 21%,” the report warned.
The study also noted that consumption and exports are expected to moderate due to the global economic downturn and U.S. tariffs–Colombia’s main trading partner.
The OECD pointed out that nearly one-third of Colombia’s exports go to the United Stated, although the majority (60%) consists of minerals and petroleum products that are exempt from tariffs. As a result, the effective U.S. tariff rate on Colombian imports stands around 5%.
It’s also important to note that the international landscape plays a key role in shaping Colombia’s economic outlook. Nearly one-third of the country’s exports are destined for the United States, where most products are exempt from trade tariffs.
However, the OECD warns that “The decline in oil prices will reduce exports and fiscal revenues, adding pressure to already tight fiscal revenues,” the report added.
As for inflation–which has remained around 5.2% since November–the OECD noted that it is expected to continue decreasing, but at a slower pace than previously anticipated. Inflation expectations for the end of 2025 rose from 3.9% in October to 4.8% in May, still above 3% target.
Colombia continues to face the challenge of a deteriorated fiscal position
On the fiscal front, challenges remain stark. The fiscal deficit, which reached 6.8% of GDP in 2024, is expected to stay elevated in the coming years, projected at 6% in 2025 and 5.6% in 2026. According to the OECD, “unless there is evidence that tax revenues significantly exceed current levels, spending cuts of at least 0.9% of GDP will be necessary to comply with the fiscal rule.” This warning aligns with calls for a comprehensive tax reform to support fiscal stability in the country.
In response to these projections, President Gustavo Petro’s government has implemented emergency measures, including the advance collection of taxes based on projected 2026 income. The report stresses the medium-term fiscal adjustments will be critical. It also recommends reducing administrative burdens and improving infrastructure, as these steps could boost productivity and sustain stronger investment.
OECD recommendations for fostering a more stable and sustainable economic development for Colombia
However, the OECD emphasizes the risks associated to government decisions and the global economic environment. Among these challenges, it highlights the need to overcome budget rigidities and advance more progressive tax reforms that can ease the fiscal burden and strengthen the State’s capacity to tackle upcoming economic challenges.
“In the medium term, it is necessary to reduce budget rigidities and carry out comprehensive tax reform to regain fiscal space,” the organization reiterates in its conclusions.
As Colombia navigates an economic landscape shaped by international uncertainty, internal challenges–such as keeping inflation in check, improving fiscal performance, and reigniting growth to reach competitive levels–remain top priorities for short-and medium-term policymaking.