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

Prepare for the rise of the “labour-lite” business
Global Economy

Prepare for the rise of the “labour-lite” business

Staff shortages are not going away any time soon – businesses that can do without a big workforce will thrive, says Matthew Lynn.
12 Sep 2021
The charts that matter: gold and bitcoin both slide
Global Economy

The charts that matter: gold and bitcoin both slide

Gold and its modern counterpart, bitcoin, both sold off this week. Here’s what’s happened to the charts that matter most to the global economy.
11 Sep 2021
China’s new small-cap stockmarket
China stockmarkets

China’s new small-cap stockmarket

China has announced plans to establish a new stock exchange in Beijing that will be aimed at small and medium-sized firms.
10 Sep 2021
Evergrande: is China facing a Lehman Brothers moment?
Chinese economy

Evergrande: is China facing a Lehman Brothers moment?

China's property market is overheating. And one of its biggest developers, Evergrande, is in struggling to repay its debts. John Stepek looks at what'…
9 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021