BOGOTA (Reuters) – When Colombia’s central bank chief, Juan Jose Echavarria, was asked what kept him up at night with inflation low and economic growth rebounding, his answer brought a stinging rebuke from the government and stirred a debate about the solidity of the country’s recovery.
During the central bank’s quarterly inflation presentation in late May, Echavarria said his biggest concern for South America’s third-largest economy, despite growth outpacing the regional average, was worsening political polarization.
Consumers - Investors - Echavarria - Bank - Predecessors
“Consumers are scared. Investors are scared,” said Echavarria, who has differed from his central bank predecessors in his two and a half years in office by his willingness to make public statements.
Finance Minister Alberto Carrasquilla shot back that Echavarria should keep such opinions private and stick to monetary policy. Echavarria’s remarks led to weeks of testy exchanges with the center-right government, including President Ivan Duque himself.
Spat - Questions - Sustainability - Rally - Assets
The spat has raised questions over the sustainability of a rally in Colombian assets – with the peso currency rising in recent weeks and Bogota’s COLCAP stock index up nearly 20 percent so far this year – as well as the longer-term growth prospects for the $300 billion economy.
Last month, Echavarria poured fuel on the flames when he said Colombia’s economy had “stalled” in the first quarter – noting that performance was worse than expected, and compared with the previous quarter, gross domestic product actually fell by 0.01%.
% - Drop - Consumer - Confidence - April
He also pointed to a 9.6% drop in consumer confidence in April, the worst reading of the index in five months, as Colombians put off buying big-ticket items.
Carrasquilla and Duque responded by defending the government’s management of Colombia’s oil-reliant economy, which grew at an annual clip of 2.8% in the first quarter.
Economy - Economy - Recovering - Duque - Conference
“This is not a stalled economy. It’s an economy that’s recovering,” Duque said at a recent financial conference, speaking directly to Echavarria, who...
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