The Colombian economy looks set for another year of healthy growth according to economic indicators from established forecasters. Ernst and Young’s Rapid-Growth Markets Forecast for Autumn 2012 estimates that Colombia’s GDP will grow by 4.4% in 2013, a figure not dissimilar to the Colombian Ministry of Finance’s own forecast of 4.8%.
The Ernst and Young report notes though that the Colombian economy’s growth has slowed somewhat since 2011 when it grew by 5.9%. It attributes this to a fall in global demand, in particular in the key markets of the US and Europe where economic woes continue and in India and China where growth has decelerated.
It estimates this slight slow-down in Colombia’s economic growth will continue over the next four years due to the difficult global economic times, however the growth rate will not fall below 4%, making Colombia’s outlook much more positive than many developed countries.
Colombia’s national debt as a percentage of GDP is also the envy of the ailing economies of the West. At just under 15%, it gives the country plenty of leverage in its fiscal and monetary policy, a marked contrast to the US and the UK where respective national debt as a percentage of GDP figures of around 100% and 80% are imposing fiscal austerity.
One area in which Colombia has significant room for improvement according to the report is infrastructure, which it claimed was a significant factor in hindering Colombia’s ability to fulfil its potential in taking advantage of the global commodity boom in recent years. Indeed, this was reinforced by economic research institute Fedesarrallo, which recently ranked Colombia’s infrastructure as among the worst in the world.
The country’s size and three mountain ranges that run from north to south, coupled with the political instability of the armed conflict in the country has resulted in a neglect of Colombia’s infrastructure in the past 20 years, where road and rail links between its major economic centres are of a poor standard and flying is the preferred method of transport.
However, the improved political stability that Colombia is currently enjoying has resulted in the government making marked improvements in this area, for example through projects like the four lane highway to Colombia’s Pacific port city of Buenaventura.