Colombia: Diversification is the Next Step for Economic Growth
In order to reduce the country’s exposure to fluctuations in commodity prices, the Colombian government is looking to diversify the economy. Colombia has been one of the fastest-growing economies in Latin America, driven by a boom in commodity prices and surge in foreign direct investment (FDI) inflows, causing poverty levels to steadily fall. However, given low productivity and investment levels outside the oil and mining sector, the plunge in oil prices from mid-2014 to early-2016, caused real GDP growth to decline from 4.9% in 2014 to only 1.8% in 2016. In order to boost the country’s tourism sector, the government plans on developing tourism infrastructure. Furthermore, under the Fourth Generation (4G) road infrastructure program that was launched in 2013, currently the biggest of its kind in the region, the government plans on investing US$70.0 billion by 2035 on expanding and upgrading existing roads, railways, ports and airports. This should not only help boost the country’s gross fixed capital formation (GFCF) and lead to higher FDI inflows, but also foster regional integration and stimulate trade; eventually leading to recovery in economic growth.
Source: Euromonitor International from national statistics/OECD/UN/IMF (WEO)
Notes: (1) Wholesale & Retail Trade includes Repair of Motor Vehicles, Motorcycles and Personal and Household Goods. (2) Financial Intermediation includes Real Estate, Renting and Business Activities. (3) Public Administration includes Defence and Compulsory Social Security. (4) Education, Health & Social Work includes Other Community, Social & Personal Service Activities. (5) Data for 2017 is forecast