“Despite the 2008 economic recession and the ensuing decrease in the value of commodities, Colombia has maintained a steady growth rate and continued foreign investment”, said Mauricio Cárdenas, Colombia’s Minister of Finance and Public Credit, during an April 19 discussion at the Inter-American Dialogue. The session was moderated by Lisa Viscidi, Director of the Energy, Climate Change and Extractive Industries program.
GDP growth for Colombia in 2017 was 0.1%, a decrease from the 3.3% GDP growth seen in 2013. Although GDP growth has noticeably slowed down, Minister Cárdenas expressed that foreign investors and the Colombian public could be optimistic about the future; the government of President Juan Manuel Santos had taken the right economic measures to prepare the country in case of external shocks. Such measures included the depreciation of the Colombian peso and cutting back government expenses, which Cárdenas labeled “intelligent austerity”. As a result of these measures, however, Colombia saw a spike in inflation and the doubling of the national deficit to 6% of GDP in the last five years. Yet the economy showed resilience as demonstrated by investment amounting to 27% of GDP, increased formality in the workforce from 42.6% in 2010 to 49.4% in 2017, and the reduction of poverty from 30.4% to 17%. Such improvements occurred in a backdrop of declining oil revenues (27.6% in 2013, to 8.1% in 2016), resulting in a loss of dividends of up to 20% for the government. However, Colombia’s hydrocarbons sector will continue to play a key role in the economy, as will investment in infrastructure.
Despite the decline of oil prices and a 70% loss in oil exports, the Colombian economy showed remarkable resilience – @MauricioCard #ColombiaEconomía pic.twitter.com/UrMsOyUFf2
— The Inter-American Dialogue (@The_Dialogue) April 19, 2018
The Colombian Central Bank expects growth to reach 3.7% by 2022, above projections for other Pacific Alliance countries and Latin America, 3% and 2.7% respectively. The Santos government will also continue to campaign for Colombia’s membership into the OECD, with Cárdenas stating “it is an opportunity to follow the most transparent standards, to show the world we are following the best practices.”
After the signing of the 2016 Peace Accord, there are greater opportunities for the private sector, and for economic growth to consolidate peace. However, there are also many potential challenges. One of the bigger challenges includes reaching consensus among key political actors and Colombian society. Cárdenas stated that “sometimes the unpopular thing takes time” but remains confident that Colombians will eventually view the Peace Accord as a positive outcome.
In addition to the implementation of the Peace Accord, Cárdenas highlighted the recent influx of Venezuelan migrants arriving in Colombia as the most pressing political issue in the country. Although not all of the Venezuelans crossing into Colombia are permanently resettling in the country, there are important concerns regarding the speed at which these individuals are entering Colombia. As many as 350,000 Venezuelans arrived in Colombia in 2017 alone, raising questions about how this crisis should be addressed. “The problem is bigger than initially realized and Colombia should not bear the weight alone”, said Cardenas. Although the United States has provided $16 million in aid, other actors in the region need to be more involved in helping to address this issue.
