Colòmbia flag Colòmbia: Visió econòmica i política

El context econòmic de Colòmbia

Economic Indicators

Thanks to its market size, the extent of its natural resources (coffee, emeralds, oil and coal, among others) and a historical reputation as an exemplary debtor, Colombia has experienced a stable and solid growth for most of the past two decades. Although the country was affected by the fall in oil prices due to the pandemic, Colombia was able to recover and, in 2022, the country recorded a GDP growth of an estimated 7.3%. Nevertheless, economic growth slowed substantially since late 2022, and consumer and business confidence remained relatively weak. Moreover, financial conditions tightened amidst a rising cost of credit and more stringent lending criteria. Private consumption, a key driver of the strong recovery from the pandemic, also weakened. Overall, the IMF estimated a GDP growth of only 1.4% in 2023. Driven by a rebound of investment fuelled by the relaxation of financial conditions, GDP growth is expected to accelerate to 2% this year and 2.9% in 2025 (IMF).

Fiscal consolidation has been underway, yet there are concerns regarding adherence to fiscal regulations. The projected budget deficits, comprising 4.3% of GDP in 2023, 4.5% in 2024, and 3.5% in 2025, hover just within the thresholds set by the fiscal rule. Nevertheless, primary expenditures for implementing the reform agenda in 2024 surpass initial estimates. Additionally, oil, customs, and tax revenues in 2023 fell short of projections. Furthermore, fiscal strategies account for cyclical and uncertain revenues, particularly the anticipated collection of tax arrears through litigation, amounting to nearly 1% of GDP in 2024 and 0.6% in 2025, as outlined by the fiscal council. Overall, the IMF estimated the budget deficit at 2.9% of GDP last year, with an expected 2.6% deficit in 2024. In 2023, gross debt decreased to 55% of GDP and, looking ahead, that rate is expected to slightly increase to 55.4% by 2025 (from around 50% before the pandemic). Inflation in Colombia has been high and persistent due to weather-related and supply shocks over the past two years, alongside currency depreciation in 2022-1H23. Additionally, widespread indexation, including utility rates, rents, and education costs, contributes to inflation stickiness. The overall rate was estimated at 11.4% in 2023 by the IMF, with a sharp decline expected this year (5.2%) and in 2025 (3.6%), still above the upper 3+/-1% band of the central bank's target.

One third of the Colombian population lives below the poverty line. Development policies for rural areas are a priority for the Colombian government. Unemployment rates, which increased during the pandemic, declined to 10.8% in 2023, and should continue decreasing in the coming years - reaching 10.4% in 2024 and 10% in 2025. It should be noted, though, that more than half of the Colombian population continues to work in the informal sector. Overall, inequalities are strong throughout the country: Colombia has a Gini coefficient of 51.5, one of the highest in Latin America.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 343.62363.84373.43390.27410.64
GDP (Constant Prices, Annual % Change) 7.31.42.02.93.3
GDP per Capita (USD) 6,6586,9767,0877,3347,642
General Government Balance (in % of GDP) -6.7-2.9-2.6-3.0-2.9
General Government Gross Debt (in % of GDP) 60.455.055.155.454.8
Inflation Rate (%) n/a11.45.23.63.0
Unemployment Rate (% of the Labour Force) 11.210.810.410.09.6
Current Account (billions USD) -21.45-17.84-16.05-16.72-16.80
Current Account (in % of GDP) -6.2-4.9-4.3-4.3-4.1

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Natural resources are abundant in Colombia. The country has largest coal reserves in Latin America, and has the second largest hydroelectric potential in the continent, after Brazil. Colombia also has significant amounts of nickel, gold, silver, platinum, and emeralds, as well as large petroleum and natural gas reserves. Due to the climate and the topography of the country, agriculture is extensive and very diversified. Colombia's main crops are coffee, bananas, cut flowers, sugarcane, livestock, rice and corn. However, the share of agriculture in GDP has been falling consistently for over 50 years, as both industry and services have expanded, and it currently represents 8.3% of the GDP. Still, agriculture remains an important source of employment in the country, as it employs 15.9% of the workforce. As reported by the National Administrative Department of Statistics (DANE), between January and September 2023, notable growth was observed in the value added of fishing and aquaculture, with an increase of 9.9%, and in agricultural crops excluding coffee, which saw a 0.9% rise. Conversely, coffee experienced a decline of -2.6%, and livestock decreased by -0.9%.

Colombia is the most industrially diverse country of the Andean Community, with four major industrial centres: Bogota, Medellin, Cali, and Barranquilla. Most industries in the country are driven by agriculture and commodities, with the main industries being textile, chemical products, metallurgy, cement, cardboard containers, plastic resins and beverages. The sector represents 26.7% of the GDP and employs 20.1% of the workforce.

The services sector’s importance has increased in recent years, becoming the backbone of the Colombian economy as it represents 54.8% of the GDP and employs 63.9% of the workforce. Tourism is one of the most important components of the service sector and has been particularly buoyant over the past few years, especially in Bogota, Medellin, Cartagena, Cali, and Barranquilla. Colombia saw a record number of tourists visiting the country in 2023, with around 5.8 million non-residents reported, 30% than the pre-COVID level (Ministry of Commerce, Industry and Tourism ). The BPO sub-sector is one of the most dynamic with an average annual growth of 19% during the last 7 years.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 15.9 20.1 63.9
Value Added (in % of GDP) 8.3 26.7 54.8
Value Added (Annual % Change) -1.9 6.8 8.8

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
68,1/100
World Rank:
49
Regional Rank:
6

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.21/10
World Rank:
51/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Actualitzacions: April 2024

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