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

Emerging markets fall behind their developed-world counterparts
Emerging markets

Emerging markets fall behind their developed-world counterparts

While developed-world markets look forward to a recovery, emerging market stocks have tumbled as foreign investors pull out cash.
16 Apr 2021
Four of the best investment trusts for investing in emerging markets
Investment trusts

Four of the best investment trusts for investing in emerging markets

Investors need to tread very carefully in this risky sector. Here are the best ways to approach it
22 Mar 2021
Storm brews in emerging markets as investors pull cash out
Emerging markets

Storm brews in emerging markets as investors pull cash out

Foreign investors have begun to pull cash out of emerging markets as they begin to look less attractive when compared to the rising return from holdin…
12 Mar 2021
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

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
The FTSE 100 has clawed back above 7,000 – how much higher can it go?
UK stockmarkets

The FTSE 100 has clawed back above 7,000 – how much higher can it go?

The FTSE 100 index has risen to over 7,000 for the first time in over a year – it now sits just above where it was in 1999. But its era of neglect cou…
19 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021