Colombia flag Colombia: Economic outline

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 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) 345.33363.62386.08400.48417.86
GDP (Constant Prices, Annual % Change) 7.30.61.12.53.0
GDP per Capita (USD) 6,6916,9727,3277,5257,777
General Government Balance (in % of GDP) -7.0-3.2-3.0-2.9-2.9
General Government Gross Debt (in % of GDP) 60.152.554.455.655.7
Inflation Rate (%) 10.211.76.43.63.0
Unemployment Rate (% of the Labour Force) 11.210.19.99.69.3
Current Account (billions USD) -21.37-9.72-11.70-13.28-14.12
Current Account (in % of GDP) -6.2-2.7-3.0-3.3-3.4

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Colombian Peso (COP) - Average Annual Exchange Rate For 1 GBP 4,123.663,798.353,943.404,101.004,736.99

Source: World Bank, 2015

 

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Latest Update: May 2024

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