Rapid Fed stimulus taper a risk to Colombia recovery: Finance minister

Reuters

WASHINGTON (Reuters) - The Colombian economy will likely gain speed in the second half of the year, but a rapid increase in borrowing costs in the United States could be a threat to that recovery, Colombian Finance Minister Mauricio Cardenas told Reuters on Friday.

Cardenas said Colombia's economy will likely grow at an annual pace of more than 5 percent in the second half this year and then stabilize at between 4.5 and 5 percent next year.

However, he warned that a speedy normalization of monetary conditions in the United States and a slump in oil prices could risk that recovery.

"How they announce the tapering will be very important to avoid the volatility that we saw a few months ago," said Cardenas, voicing the same worries that other emerging-market officials at the IMF and World Bank annual meeting in Washington.

"A soft and gradual (stimulus) withdraw will be very important, positive."

Colombia like other emerging-market nations saw its currency tumble after the U.S. Federal Reserve signaled in May that it was ready to start withdrawing its massive stimulus program soon.

He said his government sees no reasons yet to change its economic growth forecasts that stand at 4.5 percent this year and 4.7 percent in 2014.

(Reporting by Alonso Soto; Editing by Chizu Nomiyama)

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