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OECD lowers Colombia's 2018 growth forecast to 2.7%

The Organisation for Economic Co-operation and Development lowered its 2018 growth forecast for Colombia's economy to 2.7% from 3.0% but it foresees the country will have stronger growth next year.

In its latest outlook report for the country, the OECD said it expects that Colombia's GDP will advance 3.2% in 2019 as it will see rising domestic demand and investment.

Growth in Colombia will also be supported by low interest rates and higher oil prices, the OECD said. The end of the armed conflict will usher in potential upsides for the tourism sector, the organization added.

However, the country could face risks from a faster-than-expected normalization of the monetary policy of the U.S., which would raise volatility and the risk of lower capital inflows. Increased migration from Venezuela could also weigh on the country's spending in the short term, but it can also be an upside for growth if it is well-managed, the OECD said.

"Stronger and more inclusive growth requires boosting productivity through structural reforms, which would also support regional development and the peace transition," the organization said.

The OECD expects inflation to decline further towards the central bank's 3% target in 2018, noting that "a slightly more accommodative monetary policy would be appropriate."

Colombia was invited to sign an accession agreement with the OECD on May 30 after the body agreed the country could become a new member.

The world economy is expected to grow by 3.8% in 2018 and 3.9% in 2019, up from 3.7% last year, the OECD earlier said.