Colombia's economy steps up a gear

Colombia's political and economic turnaround is drawing in foreign investment.

Colombia has been through a "political and economic turnaround", and now offers an appealing macroeconomic story, says Peter Kohli on Marketwatch.com. Violence has declined markedly in the past decade, while inflation has been tamed and the government is keeping a strict eye on the public finances.

This improved backdrop has enticed foreign capital into the country: foreign direct investment doubled last year. Throw in rising consumption by the expanding middle class, which has nearly doubled in a decade, and it's clear why growth reached 6% in 2013.

The outlook remains positive. Colombia's main exports are oil and coal, which have held up reasonably well compared to other commodities. Its raw materials exports also go mainly to the US and Europe, as Kohli notes, so China's long-term slowdown is not so important.

Meanwhile, says The Economist, a law in 2012 cut burdensome payroll taxes and has encouraged job growth. A reduction in mortgage rates has spurred a housing construction boom.

And public-private partnerships in roads and railways worth $25bn are planned by 2018, which the government hopes willraise GDP by 1.5% during construction, and 0.7% over four years once it isin use.

There is still much to be done, especially on the political front.A comprehensive peace deal with the Farc guerrillas, who have been fighting the state for 50 years, would unlock even more foreign investment. But the overall outlook is encouraging.

James McKeigue of LatAm Investor and MoneyWeek's free email newsletter, The New World, highlights Colombia's biggest bank, US-listed Bancolombia (NYSE: CIB), as a possible play on the country.

Recommended

I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020
Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
Beware: inflation is starting to stir in the US
Inflation

Beware: inflation is starting to stir in the US

With US consumer prices up by 1.4% in the last year, concern about inflation is now everywhere.
22 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
The world’s fund managers are getting very bullish – be careful out there
Stockmarkets

The world’s fund managers are getting very bullish – be careful out there

The latest survey of fund managers shows them to be extremely bullish on all the same things. And that, says John Stepek, means the market is in dange…
21 Jan 2021
Prepare for the end of the epic bubble in US stocks
US stockmarkets

Prepare for the end of the epic bubble in US stocks

US stocks are as expensive as they’ve ever been. How can you prepare your portfolio for a bubble bursting?
18 Jan 2021