Colombia: Underperformance To Continue – BBH

By FXStreet FXStreet (Córdoba) – According to analysts from Brown Brothers Harriman, Colombian peso’s underperformance is likely to continue during 2016.

Key Quotes:

“Colombia is struggling with low oil prices, a sluggish economy, a very weak currency, and rising inflation. While Colombia has a good track record with regards to policymaking, we think the poor fundamental outlook will keep its assets in the underperforming camp.”
“The economy is still adjusting to lower oil prices. GDP is expected to grow 2.9% this year and 2.8% next year, the slowest rates since 2009. Retail sales have accelerating, helping to offset the drag from the external sector. However, higher rates are likely to crimp consumption moving forward.”

“Inflation is high and still rising. CPI rose 6.4% y/y in November, the highest since February 2009 and well above the 2-4% target range. Back in early 2009, the policy rate was just starting to come down from the 10% peak from H2 2008. PPI inflation is still accelerating, up 8.9% y/y in November. The central bank has hiked rates by 100 bp to 5.5% since September, and is widely expected to hike another 25 bp to 5.75% this week.”

“Slow growth and …read more

Source:: FX Street