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Understanding the macroeconomic and financial vulnerabilities associated with the global low-carbon transition for Colombia

Author

Listed:
  • Antoine Godin

    (AFD - Agence française de développement, ACT - Analyse des Crises et Transitions - LABEX ICCA - UP13 - Université Paris 13 - Université Sorbonne Nouvelle - Paris 3 - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité - Université Sorbonne Paris Nord - Université Sorbonne Paris Nord)

  • Sakir Devrim Yilmaz

    (AFD - Agence française de développement)

  • Jhan Andrade Portela

    (National University of Colombia)

  • Diego Alejandro Guevara

Abstract

Based on the analysis of three scenarios of oil and coal exports over the period 2023–2050, this chapter highlights the greater macroeconomic and financial fragility that the global low-carbon transition (and subsequent decline in demand for fossil fuels) may entail for the Colombian economy. The decline in fossil fuel exports will deeply affect Colombia's real and external sectors and deteriorate its fiscal and financial conditions. Ensuring a constant stream of international flows can help mitigate the negative impacts of the global transition in the long term. Still, the main driver of a recovery lies in industrial policy. Colombia will need to reduce its import dependency and diversify its exports (increasing the export base with sophisticated and higher value-added goods and services)—which will require coordinated actions between industry, finance, and the government. Implementing these policies early is a priority, since such structural transformations take time to materialise.

Suggested Citation

  • Antoine Godin & Sakir Devrim Yilmaz & Jhan Andrade Portela & Diego Alejandro Guevara, 2024. "Understanding the macroeconomic and financial vulnerabilities associated with the global low-carbon transition for Colombia," Post-Print hal-05208165, HAL.
    • Handle: RePEc:hal:journl:hal-05208165
    Note: View the original document on HAL open archive server: https://hal.science/hal-05208165v1
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