The Colombian economy underperformed in Q1 2023, hindered by the largest-ever interest rate hikes, which curtailed investment. The GDP grew by 3% YoY in Q1 2023, falling short of the anticipated 3.4% growth. Quarterly, the economy expanded by 1.4%. Given the slowest growth prediction since the pandemic for this year, the central bank may consider interest rate reductions as inflation nears its target. In the past 18 months, borrowing costs have escalated by 11.5 pp to 13.25%, the peak in nearly 25 years. Despite inflation easing to 12.8% last month after reaching a record high since 1999, it’s still significantly above the central bank’s 3% annual inflation target.