Global and Domestic Trends Impacting Colombia's Economic Outlook

Colombia has grown exponentially during the past few years, with GDP growth double the expected rate. To explore the country’s economic outlook and recovery, the U.S. Chamber of Commerce's U.S.-Colombia Business Council (USCBC) hosted its first annual Colombia's Economic Outlook event. Leaders from the U.S. and Colombian business communities shared key insights on how global trends will impact the Colombian economy in 2022 and beyond.

Colombia’s Economy Has Doubled Its Projected Growth

According to Lucas Almeida, chief Colombia economist at Morgan Stanley, Colombia’s economy expanded 10.6% last year.

“If you had asked any Colombia analyst at, let's say June last year or July last year, how much Colombia’s economy would grow, most people … [were] working with the assumption that the economy would grow around 5%,” he explained. “The actual figure was over double that.”

Almeida noted that the economy posted a 6.8% contraction in 2020, meaning Colombia is well above pre-pandemic levels in terms of economic output.

“Such resilience is mainly a product of … a strong domestic demand — mainly Colombian consumer spending in the domestic economy,” he continued. “This is not driven by the external sector as some other growth rebounds have been in previous years.”

As a result of this strong economic growth, fiscal accounts have improved considerably.

“Basically, spending has been running in line with what the authorities have been budgeting,” Almeida said. “There is still a lot of fiscal stimulus in the pipeline to help households and businesses navigate the COVID crisis.”

The Country Is Focused on Improving Social Indicators

Colombia is known for its oil, coffee, copper, and gold — and each of those markets has contributed to the country’s economic growth over the past few decades.

“GDP in the year 2000 was around $96 billion, and if you take a look at 2021, the GDP went up to $314 billion,” said Bruce Mac Master, president of the National Business Association of Colombia (ANDI). “So the economy really has grown a lot during these two decades, and that’s something we expect to maintain during this decade.”

“That's one of the main challenges we do have today,” he added. “The reforms are important. The economy’s growth is important. But something that is really important is the social indicators, and we are really focusing on trying to improve them.”

Such social indicators include increasing investments in health services, decreasing the poverty rate, and strengthening other contributions to social wellbeing.

The Private Sector Plays a Major Role in Colombia’s Economic Recovery

Many professionals in the private sector assumed they were upstanding employers and business people, and if they paid their dues and taxes, that was enough contribution to society. However, that wasn’t the case.

“Unfortunately, we [learned] a big lesson the hard way with all the blockades that took place,” said Cesar Caicedo, CEO of Colombina. “The great lesson … is that our work cannot stop there.”

Caicedo said he visited many neighborhoods and met many leaders and counterparts to better understand the frustration many were experiencing.

“The good thing is that their anger, and in many cases well-founded anger, is not directed towards the system itself and the private sector,” he explained. “It's more directed towards the politician, and obviously corrupt politicians, and they are being left out.”

“Our responsibility doesn't end with being good corporate citizens, in paying our dues and our taxes,” Caicedo continued. “We have to go further. Starting at a local level, [we have to] assure the taxes we are paying, and all of Colombia is paying ... are invested in much more efficient and clear ways.”