(Bloomberg) — Colombia’s economy suffered its deepest contraction in more than a century last year, leaving it wracked by soaring debt, mass unemployment and hunger.
Gross domestic product fell 6.8% last year, the statistics agency said Monday, its worst performance since records began in 1905. The economy contracted 3.6% in the fourth quarter from a year earlier, which was less severe than the 4.5% drop forecast by analysts surveyed by Bloomberg.
Avianca Holdings SA was among the thousands of companies that went bankrupt, and Central Bank Governor Leonardo Villar said this month that the economy won’t recover its pre-pandemic level of output until the end of 2022.
Pandemic-related spending and a fall in tax revenues caused the fiscal deficit to rise to about 9% of GDP in 2020, up from 2.5% the previous year. That’s put Colombia’s investment grade credit rating at risk, and left the government looking for ways to boost revenues to prevent a downgrade. Government debt rose to 68% of GDP last year, from 36% a decade ago.
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The crash came as the country was struggling to cope with the fallout from Venezuela’s crisis, which has driven about 1.7 million migrants to seek refuge in Colombia.
Colombia’s statistics agency said last year that 29% of of households aren’t eating three meals a day, compared to 11% before the pandemic.
More than one million jobs were destroyed over the course of the year, leaving Colombia with an urban unemployment rate of 16%, among the highest in the Americas.
Policy makers have held interest rates at record low of 1.75% for four months in a row, but last month two board members called for extra stimulus.
Economists at the central bank expect the economy to rebound by 4.5% this year, led by a recovery in internal demand.
Colombia published its GDP figures before most of its peers. The country’s 2020 contraction compares with expected falls of 12% in Peru, 6% in Chile and 4.5% in Brazil according to analysts surveyed by Bloomberg.