World Economy

Colombia Rises From Contraction to Growth

Colombia Rises From Contraction to GrowthColombia Rises From Contraction to Growth

Colombia, a country whose economy has enjoyed a rebirth since the economic catastrophe of 1999, is a nation full of optimism. This millennium, its GDP per capita has increased three-fold, poverty halved and GDP growth averaged at 4.26% year-on-year.

This week, the World Bank set Colombia’s growth expectations for the year to 2.5%, which is a rate twice that of the Latin American average; a region coming off the back of two consecutive years of contraction at -1.4% due to depressed commodity prices, as well as geopolitical problems in the region’s most prominent economies, The Market Mogul reported. 

Colombian exports account for approximately 5.9% of total economic output and, like many emerging market economies, the country’s predominant export is oil, at approximately 55%. A 70% collapse of WTI crude oil prices between 2014-2015 threatened to stifle a decade of economic progress; Colombia’s external debt grew to 33% of GDP from 25% the year prior, government revenues fell by around 2.1% of total GDP, and the Colombian peso remains to this day around 37% weaker against the dollar.

This has been an annoyance for Latin America’s fourth-largest economy, but unlike neighboring Venezuela, this has not resulted in crippling hyperinflation and a wide-spread shortage of basic goods. Instead, the government has been proactive in dealing with infrastructural issues while the central bank is continuing to reduce inflation to its target of 3%, a strategy in place since 2004.

Investor confidence also remains high. Total direct foreign investment into Colombia stands at ten times the figure a decade ago. 

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