Economic Outline

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 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.

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