Economy

Top 5: Colombia

Signs Point to Stability in Colombia

Colombia, the third largest economy in Latin America, is increasingly taking a leadership role in the region by focusing on diplomacy, infrastructure projects, and a diversified export market.

Colombia’s Angie Saray Gonzalez Echeverria, competing in Athletics Women’s 200m, practices at the Athletics Field, Youth Olympic Park, the Youth Olympic Games, in Buenos Aires, Argentina, October 5, 2018. Jed Leicester for OIS/IOC/Handout via REUTERS

On January 17, the Colombian capital of Bogotá was shaken by violence reminiscent of an era many residents thought they had left behind.

In its first terror attack in years, 21 people lost their lives when a car bomb hit a crowded police academy ceremony.

State officials said the attacker was a member of the militant National Liberation Army (ELN), raising concerns of lingering security threats following recent progress on peace accords.

Yet in taking a broader view of developments in the South American nation, the event was an outlier, as society sustains a momentum toward greater peace and stability.

Colombian officials are currently renegotiating a peace deal with the nation’s largest rebel group, the Revolutionary Armed Forces of Colombia (FARC).

Meanwhile, the nation, now the third largest economy in Latin America, is increasingly taking a leadership role in the region by focusing on diplomacy, infrastructure projects, and a diversified export market.

Ongoing peace process

In June 2018, Colombian President Ivan Duque was elected on a campaign promise to rewrite a 2016 peace deal signed with the FARC. Though the initial deal was seen as a milestone after more than 50 years of armed conflict, voters rejected it by a narrow margin in a subsequent referendum due to disagreements over the terms for former rebel combatants.

At the same time, an estimated 1,300 to 1,700 guerrillas with the ELN continue to clash with Colombian forces. Founded in 1964, the Cuban-inspired ELN is believed to be the last active guerrilla group in the country.

Following the attack in mid-January, President Duque has taken a hardline stance against the ELN, demanding the group release all hostages as a prerequisite to peace talks with the group.

The president’s strategy will be tested in 2019.

Transportation upgrade

After decades of having some of worst ranked transportation infrastructure in Latin America, Colombia has invested in big-ticket highway and urban transport projects that have drawn international attention for their innovation and impact.

The city of Medellín has inspired urban developers around the globe with its mixed use of cable cars that connected once impenetrable, low-income neighborhoods with municipal tramways, allowing greater movement between working class areas and commercial districts.

Bogotá has also made headlines with its new rapid-transit bus system, which has taken pressure of the capital’s long-choked highway system, while pursuing a citywide bike path network to reduce dependence on automobiles.

Now President Duque is following up with campaign promises to implement a stalled 4G plan, or “fourth generation” plan, to upgrade the national road system. In January, he announced 70 percent of the USD14.8 billion initiative would be financed and under construction by March 2019.

The 4G infrastructure projects include about 40 road, bridge, and tunnel projects that will reduce transit times between major cities and ports while boosting national trade and commerce.

Diplomatic leadership

As political and economic crises continue in neighboring Venezuela, President Duque has stepped forward to create a new regional diplomatic group for South American countries with aims to diminish the influence of the embattled Venezuela government.

The Colombian president proposed an inter-continental forum called “Prosur” be created as a counterweight to the Venezuelan-led and increasingly fractured Union of South American Nations, or UNASUR.

In 2008, UNASUR was created by former Venezuelan President Hugo Chavez to foster cooperation among South American nations and reduce the influence of the US in the region.

Yet UNASUR has weakened under the leadership of current Venezuelan Pres. Nicolas Maduro, who is facing mounting criticism for his undemocratic leadership style. Argentina, Brazil, Paraguay, and Peru have pulled out of UNASUR and are expected to join Colombia’s Prosur to pursue a more conservative agenda, aligning with the recent rightward shift in politics on the continent.

Tourism

The ongoing peace process has not only helped foster economic development in Colombia, but it’s also bolstered the tourism industry, which until recently was lagging behind other South American destinations.

Long shunned by international travelers, Colombia is currently experiencing a tourism boom that’s coinciding with an improved security situation in the country. According to government data, the country hosted more than 3 million visitors in 2017, a 200 percent jump since 2006, and the upward trajectory continued through 2018.

With its Caribbean and Pacific coastlines, mild tropical weather, and diverse landscapes ranging from Andean highlands to Amazon rainforest, Colombia offers a variety of travel experiences that are becoming increasingly popular as visitors spread the word. Globally, the average tourism sector makes up around 10 percent of a to a nation’s GDP.

In Colombia, tourism currently accounts for 4 percent of the GDP, meaning the industry is likely to grow for years to come, boosting other sectors in the process.

Diversified exports

Government officials expect Colombia’s economy to grow 3.5 percent in 2019. Traditionally, commodities and natural resources, the most significant of which are petroleum and emeralds, drive more than half of Colombia’s exports. Yet in 2018, the International Monetary Fund noted a critical need to diversify Colombia’s economy as its oil reserves are expected to fall dramatically within seven years.

Upon taking office, President Duque seems to have taken the advice to heart, by investing beyond long-running mining and agricultural sectors, such as coal and coffee, which have kept the economy humming along, but present an increasingly unsustainable track for the 21st century.

In his signature initiative, President Duque is now promoting what he calls the “Orange Economy,” an effort to boost a mix of sectors including traditional and digital arts, cultural activities, and eco-tourism, while at the same time strengthening legislation protecting intellectual property rights.

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