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Citigroup strategists query President Gustavo Petro’s pension reform in Colombia.
They imagine the plan, aiming for a multi-pillar system, won’t move or shall be too diluted to affect markets considerably.
Citi’s lead economist, Esteban Tamayo, highlights the quick timeline and potential dilution of the reform.
Presently, the Senate is debating it, resisting dismissal efforts. Petro’s proposal features a transitional scheme for these nearing pension eligibility.
A authorities official emphasised the talk’s significance, aiming to learn most Colombians.
Luis Carlos Reyes, from Colombia‘s tax authority, identified on social media that the reform may guarantee pension system sustainability till 2070, assuming about 3% annual GDP progress.
After a healthcare reform setback, Petro‘s focus shifted to labor and pension reforms.
Tamayo doubts that labor reform will advance subsequent semester. He forecasted healthcare reform’s failure, citing political noise and minimal asset affect from well being entity interventions.
Financial Insights
Final 12 months, Colombia’s financial system grew solely by 0.6%, primarily resulting from a steep funding decline.
Tamayo sees a possible restoration pushed by rates of interest and improved political sentiment.
Nonetheless, he foresees a consumption slowdown and stagnant authorities spending as the primary challenges for 2024.
Citigroup predicts a 4.4% inflation price for Colombia by year-end 2024.
Tamayo notes the problem of negotiating gas value will increase however expects meals costs to stabilize, indicating the worst of the El Niño phenomenon could also be over.
He additionally mentions power sector pressures from low reservoir ranges and rising market costs.
This implies delayed client affect resulting from futures contracts, thus minimizing fast value shocks except the scenario is extended.
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