Effects on the Colombian economy of COVID-19:

The outbreak of the disease has had an alarming impact on human life and the economies of the affected countries. As of this writing, more than 5 million people have been infected worldwide. It has become a pandemic, with small chains of transmission within many countries and large global chains that have spread the virus widely around the world. Now, against this backdrop, it will be very difficult for governments to simultaneously minimize deaths from coronavirus disease 2019 (COVID-19) and the economic impact of viral spread. It will therefore be necessary that, while implementing efficient containment measures to minimize the human life costs of the pandemic, governments also put in place bold mitigation and repair measures to moderate the effects of an economic recession, which seems inevitable. In the absence of public action, GDP could contract by up to 3.9%, and the effect could extend to 2021, with significant future impacts on the economy's productive capacity. The containment measures (COVID+CC scenario), which effectively limit interpersonal contacts and distance people socially, initially exacerbate the economic impacts of the crisis, deepening the drop in GDP in the second quarter to 11.1% vs. a 6.5% drop in the COVID scenario. However, if effective, they should allow for a gradual recovery of the economy, enabling it to close the year with a fall of only 2.2%, compared to 3.9% in the scenario without containment. If mitigation measures are also applied, allocating 14.5 trillion pesos of established savings funds to them (COVID+CC+CM scenario), then the overall effect could moderate to some extent (improving the annual result by 0.3%, which would now be -1.9%, instead of -2.2%), although clearly the fundamental effects of mitigation would be associated with the welfare of the vulnerable population, with limited effects from the macroeconomic point of view. Thus, containment measures are necessary, even if they temporarily exacerbate negative macroeconomic effects. But they must be accompanied by mitigation measures to attenuate the severe effects of the crisis on the population; and by repair measures to prevent the deterioration of the productive apparatus (massive bankruptcies of companies that could result from the crisis) and ensure the rapid restoration of productive activities when the crisis is over.