Colombia: Economic and Political Overview
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 stable and solid growth for most of the past two decades. The country’s macroeconomic stability is supported by a strong institutional framework, including a rules-based fiscal system, flexible exchange rate, and inflation targeting. However, economic growth has slowed, with low productivity contributing little to GDP growth. Despite various trade agreements, the country has struggled to diversify exports. Ongoing infrastructure issues, weak education outcomes, and institutional challenges limit Colombia's economic potential. GDP growth was estimated at 1.7% in 2024. While activity gradually recovered, key sectors like construction and manufacturing remained weak, and the mining sector continued to decline. GDP growth is projected at 2.5% in 2025 (IMF), with the economy recovering and nearing its potential growth rate by 2026. Private consumption, strong export growth, moderate import increases, and rising private investment are expected to drive the recovery, as inflation and interest rates decline.
The central government fiscal balance for 2024 was 6.7% of GDP, driven by revenue shortfalls and the failure to implement offsetting spending cuts. Consequently, general government debt to GDP rose to an estimated 58%, up from 53% in 2023 (Fitch Ratings). Due to revenue uncertainty and a weaker-than-expected 2025 outlook, Fitch raised its central government deficit forecasts for 2025 and 2026 to 6.2% and 5.8% of GDP, respectively. Therefore, the consolidated general government debt is expected to rise, reaching 62% of GDP by 2026, so as the interest/revenue ratio, seen at 15.7% in 2025 up from 14.9% in 2024. According to official governmental figures, inflation stood at 5.2% in 2024 and should continue declining to reach the upper band of the central bank's 3% (+/- 1pp) target by end-2025. The current account deficit is expected to widen slightly in 2025 to 2.1% of GDP, up from 1.8% in 2024. Additionally, the central bank has increased reserves to USD 61.9 billion by the end of 2024 to strengthen its external liquidity position.
As per the latest World Bank projections, 31.7% of the population was living below the poverty line as of 2024 (USD 6.85/day 2017 PPP). While inflation has declined, higher prices limit improvements in real incomes and food security. Climate shocks may also impact households, especially in regions like the Caribe and Pacífico. Investing in access to quality education is crucial. The unemployment rate stood at 9.1% at the end of December 2024, the lowest level since 2017. 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 54.8, one of the highest in Latin America.
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 363.57 | 417.21 | 419.33 | 440.30 | 462.30 |
| GDP (Constant Prices, Annual % Change) | 0.6 | 1.6 | 2.5 | 2.8 | 3.0 |
| GDP per Capita (USD) | 6,963 | 7,917 | 7,895 | 8,234 | 8,592 |
| General Government Balance (in % of GDP) | -3.4 | -4.4 | -3.7 | -3.4 | -3.1 |
| General Government Gross Debt (in % of GDP) | 54.3 | 55.8 | 56.1 | 56.5 | 56.6 |
| Inflation Rate (%) | 11.7 | 6.7 | 4.5 | 3.1 | 3.1 |
| Unemployment Rate (% of the Labour Force) | 10.2 | 10.2 | 10.0 | 9.8 | 9.6 |
| Current Account (billions USD) | -9.15 | -10.60 | -10.76 | -12.14 | -14.11 |
| Current Account (in % of GDP) | -2.5 | -2.5 | -2.6 | -2.8 | -3.1 |
Source: IMF – World Economic Outlook Database, October 2021
Natural resources are abundant in Colombia. The country has the 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 8.7% of the GDP. Still, agriculture remains an important source of employment in the country, as it employs 14.4% of the workforce. As reported by the National Administrative Department of Statistics (DANE), in 2024, agricultural, livestock, fishing and forestry activities expanded by 8.1%, contributing 47% to national growth. Colombia's coffee sector grew by 22.5%, reinforcing its status as the country’s flagship product. Livestock expanded by 5.6% annually, accelerating to 6.6% in Q4. Agricultural support services rose by 8.3%, driven by tech and infrastructure improvements.
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 24.6% of the GDP and employs 20% of the workforce, with manufacturing alone representing 11% of GDP, led by the chemical products sub-sector. In 2024, industrial production fell by 1.7% compared to 2023, according to DANE data.
The services sector’s importance has increased in recent years, becoming the backbone of the Colombian economy as it represents 56.9% of the GDP and employs 65.6% 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 2024, with around 6.7 million non-residents reported, marking an 8.5% increase y.-o-y (Ministry of Commerce, Industry and Tourism). The BPO sub-sector is one of the most dynamic with a 3.5% contribution to the national GDP. Finally, Colombia's banking sector is also pivotal to the country's economic development, featuring a blend of national and international banks.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 14.4 | 20.0 | 65.6 |
| Value Added (in % of GDP) | 8.7 | 24.6 | 56.9 |
| Value Added (Annual % Change) | 1.4 | -2.0 | 1.6 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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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.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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