My way or the highway

COLOMBIA - Report 28 Feb 2023 by Juan Carlos Echeverry and Andrés Escobar Arango

Mainstream indicators reveal a pessimistic sentiment: the COP exchange rate, migration data, capital flight, consumer sentiment and surveys about the state of the nation under President Gustavo Petro all indicate a souring of outlook. Colombians are visibly moving either their assets or their bodies out of the country. Households are enduring a stubborn inflation that corrodes family income and the value of their assets, darkening their view of the future. And support for the Petro administration is suffering. The bad news and public reactions may continue in the coming months, and prevail at least until yearend.

But we believe the response of the economy and society to the quite aggressive and fast-paced Petro administration agenda has already ignited reactions that will eventually constrain its scope of policy and political action. We consider that a positive development, with foreseeable positive effects in the medium term. Indeed, during H1 2023 members of Congress are about to face a tough choice, between approving risky and politically (and economically) costly reforms, and then facing voters in October. Petro’s party will also face the electoral fortunes of its candidates for governorships and mayorships. The sentiment is that progressives could face an uphill battle in Bogotá and Medellín, and probably in Cali and Cartagena too.

Analysts and healthcare industry representatives seem obfuscated about a system that many people consider one of the main achievements of the last three decades. Petro and his stubborn and ideologically radical healthcare minister Carolina Corcho aim to improve everything by turning the system upside down and transferring most functions to the public sector. Inside criticism of the reform already caused the first cabinet crisis.

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