Colombia’s ability to weather external shocks has been enhanced by its steady strong economic policies and aggressive advocacy of free trade agreements in recent years. For the past three years, real GDP has expanded at a rate of more than 4% per year, extending nearly a decade of solid economic growth.
President Csar Gaviria Trujillo’s (199094) administration began economic liberalization policies, known as “apertura economica,” in 1990, and has continued to do so since then, with tariff reductions, financial deregulation, privatization of state-owned enterprises, and the adoption of a more liberal foreign exchange rate. Almost all sectors were opened to foreign business, with the exception of agricultural products, which were still protected.
His then-Minister of Finance, Rudolf Homes, proposed that the country import agricultural products in which it lacked competitiveness, such as maize, wheat, cotton, and soybeans, while exporting those in which it excelled, such as fruits and flowers. As a result of this policy, the industry has lost 7,000 km2 to imports, primarily heavily subsidized agricultural products from the United States, with a significant impact on rural employment. Nonetheless, this strategy saves the typical Colombian money on food compared to a more restrictive agricultural trade policy.
Colombia had a very steady economy until 1997. The first five years of liberalization were marked by high economic growth rates of 4% to 5%. During the Ernesto Samper administration (199498), social welfare initiatives aimed at Colombia’s lower-income people were prioritized. These reforms resulted in greater government expenditure, which raised the fiscal imbalance and public sector debt, requiring higher interest rates to finance. The overvalued peso that had been passed on from the previous administration was preserved.
The economy began to weaken, and by 1998, GDP growth had dropped to just 0.6 percent. The country entered its first recession since the Great Depression in 1999. With unemployment at nearly 20%, the economy shrunk by 4.5 percent. While unemployment remained at 20% in 2000, the economy grew at a rate of 3.1 percent. Compared to two decades ago, unemployment has decreased to 12.20 percent in 2020.
When President Andrs Pastrana Arango assumed office on August 7, 1998, the economy was in a state of crisis, with a tough internal security situation and global economic turmoil adding to the lack of trust. In 1999, when indications of a severe recession became obvious, the government enacted a variety of measures. It went through a series of controlled devaluations before deciding to let the peso float. Colombia also agreed to a $2.7 billion guarantee (extended funding facility) from the International Monetary Fund in exchange for the government’s commitment to budget discipline and structural reforms.
By early 2000, the economy had begun to revive, with the export sector leading the way, thanks to a more competitive exchange rate and high prices for petroleum, Colombia’s main export product. Coffee prices, the second major export item, have been more volatile.
In the year 2000, economic growth was 3.1 percent, and inflation was 9.0 percent. By 2021, inflation will have steadied at 3.30 percent. Colombia’s overseas reserves have been consistent since 2000, rising to $58.57 billion by 2021, and the country has effectively maintained its presence in international capital markets. Colombia’s overall foreign debt was $34.5 billion at the end of 1999, with $14.7 billion in private debt and $19.8 billion in public debt. Colombian state debt has been rated below investment grade by major international credit rating agencies, owing to huge fiscal deficits that current policies are attempting to reduce. Colombia has regained its investment grade rating as of 2021.
Former President lvaro Uribe (elected on August 7, 2002) implemented a number of neoliberal economic reforms, including measures aimed at lowering the public-sector deficit to less than 2.5 percent of GDP in 2004. The government’s economic policies and contentious democratic security plan have boosted economic confidence, notably among businesses, and GDP growth in 2003 was among the greatest in Latin America, at over 4%. Over the next decade, this growth rate was maintained, averaging 4.8 percent from 2004 to 2014.
Colombian President Ivn Duque abandoned a contentious tax reform measure on April 28, 2021, after four weeks of massive protests across the country.
PILLAR RANKINGS
Colombia had the best results in Natural Environment and Health, but the worst results in Education.
Safety and security are important. In comparison to a decade ago, the biggest improvement was in Safety & Security.
Is Colombia a developing or developed country?
The International Monetary Fund classifies Colombia as an upper middle-income country with one of Latin America’s major economies.
Is Colombia classified as a third-world country?
Yes, it is correct. According to contemporary criteria, Colombia is a third-world country. It is less developed economically than the first and second world countries. Corruption, poverty, and violence are all prevalent in the country, and some cities remain hazardous.
Is Colombia’s GDP impressive?
Colombia has a thriving market economy, with oil, mining, agriculture, and manufacturing as the mainstays. The country’s GDP was US$226 billion in 2013, with a per capita GDP of US$10,100, putting it in the middle-income category. Over the last ten years, the economy has grown at a rate of 4.7 percent. In the last five years, inflation has averaged 3.8 percent, with unemployment hovering around 10%.
Small-scale gold mining and subsistence agriculture were the cornerstones of Colombia’s economy during the colonial period and into the early twentieth century. Coffee production began in the 1920s and quickly extended across the country, becoming Colombia’s most important export good. The mild arabica species of coffee is grown at elevations ranging from 1,000 to 1,900 meters, usually by small growers. Colombia focused on boosting production volume during the majority of the twentieth century, branding it with the Caf de Colombia label and the fabled coffee farmer Juan Valdez and his donkey Paquita. A dramatic global drop in coffee prices over the last decade has prompted a rethinking of this strategy, with a greater emphasis on specialty coffees. Coffee now accounts for only 3% of all Colombian exports.
Colombia produces a diverse range of products due to its diverse temperatures, which range from scorching on the coast to temperate in the mountains. Sugar cane, fresh flowers, and bananas were the only major export-driven agribusinesses until recently. However, in recent years, improvements in security have resulted in a surge in large-scale agricultural projects in palm oil, rubber, and soy. Cattle ranching takes up around a quarter of the country’s territory. Commercial forestry is still in its infancy, but there is a lot of illicit logging going on, especially along the Pacific Coast.
Oil production and mining have been key economic activity in recent decades. The Llanos, Colombia’s eastern plains, are the main hub of oil production, with oil pipelines reaching from there to Caribbean ports via the Cordillera Oriental. Currently, oil accounts for around half of all Colombian exports. There is also a lot of natural gas, which is largely used for residential purposes. Coal and nickel have been the focus of large-scale mining, with considerable resources in the Caribbean coastline region. With the improvement in security conditions over the last decade, many foreign companies, such as Anglogold Ashanti, have obtained permits for large-scale gold mining, which has often been met with community opposition. Illegal gold mining, which is frequently carried out with heavy machinery, poses a serious threat to vulnerable ecosystems, particularly along the Pacific Coast rainforest.
Colombia maintained an import substitution policy in the postwar period, promoting the expansion of native industries such as autos, appliances, and petrochemical items. The government has been steadily opening the economy to global competition and lowering tariffs since the early 1990s. The government has inked free trade agreements with the United States and the European Union in recent years. The country’s industrial sector is now fairly diverse. The country is energy self-sufficient, with hydropower providing the majority of the country’s electricity.
Because of widespread insecurity and a poor image, tourism was scarce until recently. Things began to shift in the mid-2000s, with yearly international visitor numbers nearly tripling from 600,000 in 2000 to 1.7 million in 2012. While Bogot and Cartagena still attract the majority of visitors, practically the entire country has opened up to tourism, with pockets of no-go zones remaining. This surge in tourism has fueled the creation of community and ecotourism options, which are frequently subsidized by the government. One project to promote tourism at the community level, notably among Afro-Colombians, is the network of posadas nativas (locally owned and run guesthouses). In recent years, Parques Nacionales has delegated local management of park ecotourism amenities to community-based organizations.
What is the economic strength of Colombia?
Colombia’s economy is ranked 60th in the 2022 Index for economic freedom, with a score of 65.1. Colombia is placed 12th out of 32 countries in the Americas, with a score that is higher than the regional and global averages. Colombia’s economic growth slowed dramatically in 2020, but returned in 2021.
Is Bogota a prosperous city?
Bogota, Colombia’s sky-high capital, has a high median income and is a rather costly destination to visit and live. It is, however, Colombia’s most important cultural center and an economic engine that drives the country forward.
Bogota attracts visitors because to its cuisine, culture, architecture, and history. During the country’s drug violence in the 1990s, Bogota was a hotspot. There is a wealth of historical information available concerning that tumultuous period. If history isn’t your thing, Bogota’s city and surrounds are home to 50 museums and 60 art galleries.
Sporting facilities, theaters, fine food, and shopping abound in Bogota. Pick up one-of-a-kind gifts from Bogota’s street vendors, or visit one of the city’s many high-end shopping complexes. Bogota is less expensive than the other cities on our list. A nice apartment in the city center will set you back around $600. Food and other essentials are likewise less expensive.
Why is Columbia such a poor country?
- Colombia’s jobless rate increased to 9.4% in 2017, making it Latin America’s second-highest unemployment rate after Venezuela. In the last quarter of 2017, additional 8.5 percent of Colombia’s population was unemployed, according to the National Administrative Department of Statistics.
- For more than 50 years, Colombia has been wracked by brutal internal strife. Over 5.9 million Colombians have been displaced since 1985. People then travel to metropolitan regions, where they establish informal communities on the outskirts of cities.
- According to Ministry of Housing estimates, roughly 3.8 million households, or nearly 30% of all Colombian families, do not have suitable housing. Homelessness affects around 662,146 families, or 5% of the population.
- The issues posed by Colombia’s informal settlements are numerous. These include a lack of basic facilities, poor structural quality, and limited access to money for the construction of a house in stages. People are building homes on land they don’t own due to a lack of solid land tenure. In addition, informal settlements impede access to social and health services, as well as education and career opportunities.
- Colombia has been wracked by internal strife for over 50 years. According to the World Bank, the country’s income per capita could have been 50% more than it is currently if the country had found even 20 years of peace. Between 2002 and 2013, economic growth was responsible for approximately 70% of the reduction in extreme poverty.
- In Colombia, more than 12.7 million people live on less than $2 a day. Only 2.5 percent of Colombians use microfinance services, according to Opportunity Colombia, an organization that helps marginalized individuals participate in the local economy.
- Additional statistics on poverty in Colombia suggest that more than 7 million people live in poverty in rural areas, with 2 million living in extreme poverty.
- Colombians are affected by the unequal distribution of the country’s wealth and welfare resources, which is a source of poverty. In comparison to international averages, the country’s income concentration is extremely high. The richest ten percent’s per capita income is 46 times more than the poorest ten percent’s.
- In Colombia, 81 percent of poor rural households do not have access to piped water. Furthermore, overcrowding affects 68 percent of the population.