Increasing its productivity and working on innovation: the keys for the country to raise its potential GDP.

According to the report “Macroeconomic outlook for Latin America and the Caribbean, developed by the Organization of Economic Cooperation and Development (OECD), in a context where several Latin American economies are experiencing slowdowns, expectations for Colombia are positive.

The report was presented at the University of the Rosario, where Angel Melguizzo, Head of the Latin America Unit at OECD Sebastián Nieto, Deputy Head of the unit, stated that the restrictive trade measures that are being implemented throughout the world will have serious consequences in global trade, countries’ growth, citizens’ welfare, and productivity.

“Expectations for Colombia are good. In 2018, we expect a GDP growth of 2.7%, and in 2019, 3.2%. Several countries in Latin America also face good perspectives, but Colombia is above Brazil, Argentina and Mexico, though this growth is rather small, considering the needs we have”, said Nieto.
According to Nieto and Melguizzo, one of the main keys for potential GDP growth in Colombia in the medium term is to improve human capital. “Proper skills are needed to have a more productive labour market, so better innovation policies and a suitable regulatory framework are essential elements”, added Melguizzo.

The OECD also pointed out that the 2016 tax reform “should provide enough income till the end of the current administration (0.7% and 0.5% of the GDP in 2017 and 2018), but is not sufficient to satisfy tax needs and guarantee long term fiscal adjustment”.

Therefore, the fiscal adjustment of the new administration will generate a higher tax burden, particularly because “there seems to be a small margin for further costs cutting”.

Source: Portafolio

http://www.portafolio.co/economia/primer-examen-de-colombia-como-miembro-de-la-ocde-519387