Economy
From The Report: Colombia 2017
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Following congressional approval of a landmark peace agreement and a late-2016 tax reform package, 2017 looks to be a year of significant promise for the Colombian economy. Investment and infrastructure development are expected to be the key drivers of domestic demand, and the trade balance should continue to improve. Although growth has slowed as a result of the oil price shock, the Colombian economy has been resilient. With major developments in the pipeline, a historical peace agreement renewing optimism, as well as the recovery of non-oil exports and oil prices, the economy is expected to pick up in 2017 and accelerate in the years to come. This chapter includes interviews with Juan José Echavarría, Governer of the Banco de la República; Mauricio Cárdenas, Minister of Finance and Public Credit; Rosario Córdoba Garcés, President, Private Council for Competitiveness; Bruce Mac Master, President, National Business Association of Colombia; and Gerardo Corrochano, Colombia Country Director, World Bank.

Articles from this Chapter

Overview

Brighter prospects: Growth is expected to pick up thanks to stimulus initiatives
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Following congressional approval of a landmark peace agreement, and a late-2016 tax reform package (see analysis), 2017 looks to be a year of significant promise for the Colombian economy. The country has been on the recovery since the 2014 collapse in oil prices, which predominantly affected exports, government revenues and the exchange rate. As a result, the trade balance and current account deteriorated precipitously, the fiscal deficit widened, public debt mounted and the Colombian peso…

Interview

Charting a course: Juan José Echavarría, Governor, Banco de la República, on monetary policy expectations and the volatility of exchange rate
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Interview:Juan José Echavarría What mechanisms should Colombia establish to better guard against external global shocks? JUAN JOSE ECHAVARRÍA: Monetary policy in Colombia is governed by an inflation targeting scheme and a flexible policy on the exchange rate since the peso was floated in September 1999, following a crisis that impacted our economy. The implementation of these policies changed the country’s macroeconomic trends, and stability has since been achieved. However, this has…

Interview

Strong fundamentals: Mauricio Cárdenas, Minister of Finance and Public Credit, on tax reform and investor confidence
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Interview: Mauricio Cárdenas What are the main aims of the recent structural tax reform, and what effect is raising value-added tax (VAT) to 19% expected to have? MAURICIO CÁRDENAS: The structural tax reform constitutes a substantial effort to modernise the Colombian tax system. It is a complete revision of the country’s tax structure with a long-term perspective, and focuses on competitiveness and the effective control of tax evasion. Postponing the reform was not a feasible option, as the…

Analysis

Peace dividend: The peace deal will significantly benefit the entire nation
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After five decades of civil conflict between the state, FARC, the National Liberation Army (Ejército de Liberación Nacional, ELN) and other paramilitary groups, Colombia’s painstaking peace process achieved a breakthrough in 2016. Negotiations between government and FARC guerrilla representatives had been under way in Havana, Cuba, since September 2012. PEACE AGREEMENT: On August 24, 2016 FARC – by far the largest of the guerrilla groups – and government negotiators announced that…

Interview

Competitive advantage: Rosario Córdoba Garcés, President, Private Council for Competitiveness, on the need to raise productivity
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Interview:Rosario Córdoba Garcés How can Colombia better reach the goal it set for itself in becoming the third most competitive country in the region by 2032? ROSARIO CÓRDOBA GARCES: 10 years ago Colombia defined its vision for 2032, to be one of the three most competitive countries in Latin America, with a per capita income equivalent to that of a medium- to high-income country. We have demonstrated progress in areas such as financial development, macroeconomic stability and a highway…

Interview

A multi-pronged approach: Bruce Mac Master, President, National Business Association of Colombia, on efforts to strengthen the domestic economy
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Interview: Bruce Mac Master What is needed for small and medium-sized enterprises (SMEs) to play a bigger role in the economy and have a stronger share of GDP? BRUCE MAC MASTER: The most important thing is to make SMEs part of the country’s economic strategy. Competitiveness and innovation need to be strengthened for SMEs, as well as encouraging businesses, easing access to new markets and easing access to long-term credit. Another alternative under consideration is the development of linkages…

Analysis

On the rise: An expanding middle class is driving demand and consumption
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Rapid economic growth in the decade leading up to 2012 saw Latin America’s middle class double in size, as more households moved out of poverty. Colombia was one of the continent’s fastest-growing economies during this period. The emergence of the region’s middle class has signalled important social progress and new investment opportunities. Consumption patterns have changed to accommodate the demands and preferences of those with more disposable income. Demand has surged for consumer…

Interview

The here and now: Gerardo Corrochano, Colombia Country Director, World Bank, on the country’s current economic standing
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Interview:Gerardo Corrochano How can Colombia further diversify its economy, and what barriers have there been to doing so? GERARDO CORROCHANO: Colombia’s export revenues were hit hard by the fall in oil prices, and the account deficit reached 6.5% of GDP in 2015. However, the depreciation offers opportunities for other exports, especially in the manufacturing sector. To exploit this would be important in helping firms become more productive, specifically by improving their managerial…

Analysis

Vital contribution: Improving the operating environment for small businesses to expand
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Small businesses are the backbone of Colombia’s economy, but the recent economic slowdown has hit them particularly hard. As in many other countries, micro-, small and medium-sized enterprises (MSMEs) face a range of challenges that are far less binding for larger firms that benefit from economies of scale. According to Claudia Patricia da Cunha Tcachman, manager of dynamic ecosystems at Bancóldex, the five most pressing challenges facing SMEs include accessing credit, hiring the necessary…