Colombia Economic Outlook
Improving economy:
Colombia is the fourth-largest economy in Latin America, with a GDP of around USD 400 billion, and a population of 52 million. Colombia has consistently grown faster than the Latin American average over the past decade, supported by the peace deal with FARC guerrilla movement in 2016, but remains notably poorer than the regional average in per capita terms. It is a member of the Pacific Alliance trade bloc along with fellow members Chile, Mexico and Peru, and joined the OECD in 2020.
Diverse economic structure:While services—particularly retail, tourism, and professional services—form the backbone of the economy, Colombia also has sizeable agricultural, manufacturing and mining sectors, with key exports including coal, coffee, gold and oil. The U.S. and China are by far the country's largest trading partners.
Political uncertainty:The government of leftist Gustavo Petro has attempted to increase the government's role in the provision of public services and reduce the country's dependence on hydrocarbons, though with limited success due to parliamentary pushback. Ensuing political uncertainty over the government's reform agenda and fiscal position has spurred volatility in the peso.
Challenges:Colombia faces myriad risks, including extreme climatic events, elevated economic inequality spurring social unrest—such as that which occurred in 2021—swings in hydrocarbon prices impacting fiscal revenues, a resurgence in emigration from Venezuela and a rise in violent crime.
Colombia economic outlook:Colombia has significant potential for growth, thanks to a large and growing consumer market and abundant natural resources. GDP growth should outpace the Latin America average over our forecast horizon. That said, activity will likely continue to be held back by a weak education system, poor infrastructure and persistent insecurity in some areas of the country.
Colombia's Macroeconomic Analysis:
Nominal GDP of USD 344 billion in 2022.
Nominal GDP of USD 364 billion in 2023.
GDP per capita of USD 6,971 compared to the global average of USD 10,589.
GDP per capita of USD 6,659 compared to the global average of USD 10,589.
Average real GDP growth of 3.3% over the last decade.
Average real GDP growth of 3% over the last decade.
Sector Analysis
In 2021, services accounted for 68% of overall GDP, manufacturing 12%, other industrial activity 13%, and agriculture 7%. Looking at GDP by expenditure, private consumption accounted for 72% of GDP in 2021, government consumption 17%, fixed investment 20%, and net exports -9%.International trade
In 2021, manufactured products made up 22% of total merchandise exports, mineral fuels 46%, food 18%, ores and metals 2% and agricultural raw materials 5%, with other categories accounting for 7% of the total. In the same period, manufactured products made up 76% of total merchandise imports, mineral fuels 6%, food 14%, ores and metals 2% and agricultural raw materials 1%, with other goods accounting for 1% of the total. Total exports were worth USD 59 billion in 2022, while total imports were USD 72 billion.Main Economic Indicators
Economic growthColombia's economy showed solid growth in the years before the pandemic, above the Latin American average. The pandemic then provoked a deep recession followed a sharp rebound. However, in 2023, growth slowed to a near standstill, due to high inflation and interest rates, and President Petro's unfriendly stance towards the business sector hampering investment. To read more about GDP growth in Colombia, go to our dedicated page.
Fiscal policy
Colombia's fiscal deficit hovered in the 2% to 4% of GDP range from 2014 to 2019, before exploding in 2020 as the pandemic exacerbated fiscal pressures. By 2022, amidst economic recovery, Colombia managed to narrow the fiscal deficit, though it remained wider than pre-pandemic levels. Find out more on our dedicated page.
Unemployment
Colombia's unemployment rate over the last decade was close to or in double digits, and the country grappled with challenges such as mass immigration from Venezuela, high informal employment, modest economic growth and regional disparities. The COVID-19 pandemic in 2020 significantly increased unemployment. The rate has declined since, but remains high by regional standards. For more information on Colombia's unemployment click here.
Inflation
Colombia experienced generally moderate inflation over the last decade that aligned with its central bank's target of 2.0%–4.0%. However, following the COVID-19 pandemic there was an increase in inflation into double digits, reflecting large currency depreciation, supply chain disruptions and high global commodity prices. Go to our Colombia inflation page for extra insight.
Monetary Policy
The Central Bank cut interest rates to a record low in 2020 in response to the pandemic, before hiking them well into double digits in the following years in an attempt to reduce inflation and stabilizing the weak peso. See our Colombia monetary policy page for additional details.
Exchange Rate
Colombia's exchange rate has tended to depreciate over the last decade against the U.S. dollar, largely due to persistently higher inflation in Colombia than in the U.S. In 2022, the currency plummeted due to political uncertainty over President Petro's reform agenda, before regaining some ground in 2023. For more info on the peso, click here.
Economic situation in Colombia
Annual GDP growth waned to 2.0% in Q3 (Q2: +2.1 yoy), falling short of market expectations. Public expenditure contracted, fixed investment lost steam and net trade deteriorated, outweighing a faster increase in private spending. In Q4, our panel expects the economy to be expanding at a similar rate to Q3. October’s lower inflation and healthier consumer sentiment hint at sturdy private spending, while PMI survey data suggests a recovery in the manufacturing sector. In other news, the Senate approved a controversial bill in late October lifting some restrictions on public spending, which sparked market concerns as it is set to raise public debt to around 65% of GDP by 2038 (2023: 56.7%). Meanwhile, on 25 November, state-owned Ecopetrol said it had stopped operations at a major gas plant due to protests, adding pressure to public coffers and the drought-stricken energy sector.Colombia Economic Forecasts
Projections out to 2034.55 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 51 expert analysts.
Want to get insight on the economic outlook for Colombia in the coming years? FocusEconomics collects projections out to 2034 on 55 economic indicators for Colombia from a panel of 51 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Colombia economy. To download a sample report on the Colombia's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.
Colombia Economic Indicators
Q&A:
How is the economy in Colombia today?
Does Colombia have a strong economy?
What is Colombia's main economic sector?
Colombia's economy is facing several challenges. Economic growth is expected to slow in 2023 versus 2022. Inflation remains high, and the currency, the peso, has depreciated significantly. The economy is also vulnerable to external shocks, such as changes in global commodity prices and geopolitical tensions.
Colombia has a growing economy which is currently the fourth largest in Latin America. It's known for strength in oil, mining and agriculture. However, challenges such as social inequality, political instability, and an overreliance on commodity exports affect its economic strength.
Colombia's main economic sector is services, which accounts for over half of GDP and employs about 65% of the workforce. This sector includes a wide range of activities, such as retail, finance, tourism, and professional services. That said, the primary sector is also an important contributor to GDP.