General Information

The Colombian economy is strongly subject to the vulnerability of energy and mining commodity prices, which constitute the bulk of its income. Oil and derivatives and coal accounted for 28% and 35% of exports in 2020, respectively. The country is the third-largest exporter of oil in Latin America, in addition to being the sixth-largest supplier of coal in the world, and the fourth-largest supplier of coffee.

Despite this dependence on raw materials and the uncertainties of the international context, the Colombian economy has recorded more vigorous growth in the last two years, with an increase of 2.5% in 2018 and 3.3% in 2019.

For 2020, GDP is expected to diminish by 6.8% due to COVID-19. The country has been impacted significantly, mainly by the decrease in external demand (more than estimated by the authorities) and by the contraction of internal activity due to lockdown and the increase of the unemployment rate. The inflation rate reached 1.61% in June, below the target of 3.0%, which stimulated the central bank to move forward with the process of lowering of prime interest rates initiated at the end of March (when it was reduced from 4.25% to 3.75%). The rate has been at the 1.75% level since 09/28/2020.

Colombia also stands out as one of the most integrated countries in international trade in Latin America, based on a significant policy of commercial openness and integration with international organisations. The country has signed several free trade agreements, especially at the regional level and with the United States, Canada and the EU (in force since 2014). Colombia and France have signed two agreements, for the promotion and protection of investments and to avoid double taxation.And, more recently, in August, Colombia implemented an agreement with Israel that will allow it to avoid customs duties for 97% of its exports to the country.

Colombia has a relatively open exchange rate regime, and transactions are subject to the presentation of the corresponding basic documentation to authorised intermediary institutions.

The centre-right government of President Ivan Duque, which has been in power since August 2018, is very committed to the continuity of macroeconomic policies and budgetary orthodoxy, coupled with OECD membership in 2018. The country has an agenda of structural reforms (pension, taxation, labour) to improve the business climate and modernise the country’s economy, while attracting international investors, which is pending due to the pandemic.

Currently, in addition to the consequences of Covid-19, one of the major macroeconomic uncertainties is the high level of external debt, which reached 49.7% of GDP in June 2020, and of which 55% corresponds to public debt and 45% to private debt. In the public sector, most of the debt is linked to the national government (70% of the total) and the facilities most commonly used are Bonds (US$ 4,968k), followed by credit operations with commercial banks (US$ 871M) and multilateral banks (US$ 870M).

Colombia also has the same problematic lack of investment in infrastructure as Brazil, with a complicated geography that divides it into several markets. Its agriculture has potential but suffers from under-investment.

Colombians appreciate physical contact (be prepared to shake hands).
Meetings are often prolonged by discussions on topics such as sport and family.