If a week's a long time in politics, at the moment it seems like a life-time in economics. As markets plunge across the world you'd be forgiven for believing that it's all doom and gloom. But take a quick look at Colombia for a quite different picture of the future.
The week's stories from Bogota point towards a continued and sustainable growth in the Colombian economy. Here are four reasons for optimism.
1. As reported in the previous post, the World Bank and the IMF have both this week given Colombia glowing reports - the most eye-catching conclusion being that Colombia's economy is a safer bet than France's. Incredible when one considers that France is the world's fifth largest economy and Colombia, the 30th. Colombian President, Juan Manuel Santos recently amended the constitution to introduce a lock on government borrowing, increasing overnight confidence in the economy and the government's ability to maintain control on debt levels - a quality distinctly missing from many of the G20 economies.
2 As President Santos stood up in Washington to deliver his speech to the UN earlier this week, news of Colombia's second quarter growth figures came through. GDP growth stands at 5.2%, with experts predicting this to continue to rise beyond year end. Colombia's GDP has doubled in ten years, and the IMF cited the country's economic performance as being among the best in the world. Growth is considered to be driven by consumption at home and by investment from abroad. FDI will be above 10 billion dollars this year, fueled partly by the drive to buy commodities - Carlos Slim, the world's richest man, this week reiterated his belief that profit is to be had in Colombia's oil. And, when in Washington President Santos confirmed to a meeting of the Americas Society that projections indicate Colombia could soon be producing more oil than its neighbour Venezuela.
3.While in Washington, Santos took the opportunity to continue to lobby for the speedy ratification of the free trade agreement between the US and Colombia. President Obama announced that he expected the FTA finally to be signed off within the next few weeks. At the same time, the EU Commission announced that it had agreed the FTA between Colombia and the EU. The document will now go to the Council and the European Parliament. The EU trade commissioner expects the FTA to come into force in the second half of 2012.
4.The Colombian government is not about to rest on its laurels. Attracting investment is essential to Colombia's continued and sustainable growth, something the Santos regime instinctively understands. With this in mind, Colombia's trade minister today announced that the country would expand the number of free trade zones in the country. It is expected that by 2014 the country will have 20 million hectares of FTZs, almost double the 11 million hectares currently in operation.These FTZs are designed to attract foreign investment through extremely favourable tax and customs conditions - including up to 50% tax break on sales to the local market. The Colombian government sees FTZs a key tool to attract foreign investment - as does the World Bank, which listed Colombia as Latin America's most business friendly country in their latest 'Doing Business' report.
For Colombia's economy to continue to grow, structural changes are needed, and major investment is required to improve infrastructure in the country. Good news this week does not a successful economic future make. Against the backdrop of almost universally depressing news elsewhere, however, there are reasons for optimism if you look further than the traditional markets.
The week's stories from Bogota point towards a continued and sustainable growth in the Colombian economy. Here are four reasons for optimism.
1. As reported in the previous post, the World Bank and the IMF have both this week given Colombia glowing reports - the most eye-catching conclusion being that Colombia's economy is a safer bet than France's. Incredible when one considers that France is the world's fifth largest economy and Colombia, the 30th. Colombian President, Juan Manuel Santos recently amended the constitution to introduce a lock on government borrowing, increasing overnight confidence in the economy and the government's ability to maintain control on debt levels - a quality distinctly missing from many of the G20 economies.
2 As President Santos stood up in Washington to deliver his speech to the UN earlier this week, news of Colombia's second quarter growth figures came through. GDP growth stands at 5.2%, with experts predicting this to continue to rise beyond year end. Colombia's GDP has doubled in ten years, and the IMF cited the country's economic performance as being among the best in the world. Growth is considered to be driven by consumption at home and by investment from abroad. FDI will be above 10 billion dollars this year, fueled partly by the drive to buy commodities - Carlos Slim, the world's richest man, this week reiterated his belief that profit is to be had in Colombia's oil. And, when in Washington President Santos confirmed to a meeting of the Americas Society that projections indicate Colombia could soon be producing more oil than its neighbour Venezuela.
3.While in Washington, Santos took the opportunity to continue to lobby for the speedy ratification of the free trade agreement between the US and Colombia. President Obama announced that he expected the FTA finally to be signed off within the next few weeks. At the same time, the EU Commission announced that it had agreed the FTA between Colombia and the EU. The document will now go to the Council and the European Parliament. The EU trade commissioner expects the FTA to come into force in the second half of 2012.
4.The Colombian government is not about to rest on its laurels. Attracting investment is essential to Colombia's continued and sustainable growth, something the Santos regime instinctively understands. With this in mind, Colombia's trade minister today announced that the country would expand the number of free trade zones in the country. It is expected that by 2014 the country will have 20 million hectares of FTZs, almost double the 11 million hectares currently in operation.These FTZs are designed to attract foreign investment through extremely favourable tax and customs conditions - including up to 50% tax break on sales to the local market. The Colombian government sees FTZs a key tool to attract foreign investment - as does the World Bank, which listed Colombia as Latin America's most business friendly country in their latest 'Doing Business' report.
For Colombia's economy to continue to grow, structural changes are needed, and major investment is required to improve infrastructure in the country. Good news this week does not a successful economic future make. Against the backdrop of almost universally depressing news elsewhere, however, there are reasons for optimism if you look further than the traditional markets.
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