LATIN AMERICA AND CARRIBBEAN - Colombia
BYINGTON CARTERA EMPRESARIAL S.A.S.
Cra. 7A No 69-99, Bogotá, DC
+57 1 325 5500
Economy - overview
Colombia experienced accelerating growth between 2002 and 2007, chiefly due to improvements in domestic security, rising commodity prices, and to President URIBE's promarket economic policies. Foreign direct investment reached a record $10 billion in 2008. A series of policies enhanced Colombia's investment climate: President URIBE's pro-market measures; pro-business reforms in the oil and gas sectors; and export-led growth fueled mainly by the Andean Trade Promotion and Drug Eradication Act. Inequality, underemployment, and narcotrafficking remain significant challenges, and Colombia's infrastructure requires major improvements to sustain economic expansion. Because of the global financial crisis and weakening demand for Colombia's exports, Colombia's economy grew only 2.6% in 2008, and contracted slightly in 2009. In response, the URIBE administration cut capital controls, arranged for emergency credit lines from multilateral institutions, and promoted investment incentives, such as Colombia's modernized free trade zone mechanism, legal stability contracts, and new bilateral investment treaties and trade agreements. The government also encouraged exporters to diversify their customer base beyond the United States and Venezuela, traditionally Colombia's largest trading partners. The government is pursuing free trade agreements with European and Asian partners and awaits the approval of a Canadian trade accord by Canada's parliament. In 2009, China replaced Venezuela as Colombia's number two trading partner, largely because of Venezuela's decision to limit the entry of Colombian products. The business sector remains concerned about the impact of the global recession on Colombia's economy, Venezuela's trade restrictions on Colombian exports, an appreciating domestic currency, and the pending US Congressional approval of the US-Colombia Trade Promotion Agreement.