Our comprehensive assessment of Colombia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Colombia, as well as the latest industry developments that could impact Colombia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Colombia before your competitors.

Colombia Country Risk

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Core Views:

  • Weakness in benchmark crude prices will continue to undermine real export growth and fixed investment, helping to underpin our view for structurally slower growth over the next several years.

  • We also anticipate a slowdown in real private consumption growth as consumers are hit hard by high inflation, elevated interest rates and a weaker exchange rate.

  • Hydrocarbon sector weakness will also weigh on Colombia's balance of payments position. Faltering oil prices and production will temper investment into Colombia and cool export growth.

  • Meanwhile, slower oil production growth combined with increasing pressure to spend on social programmes will feed through to fiscal slippage in the years ahead. While the country is well positioned to withstand the storm, with a relatively low external debt...

Colombia Operational Risk Coverage (9)

Colombia Operational Risk

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BMI View: Colombia offers considerable potential as an investment destination, with one of the largest populations in Latin America and a sizeable economy based on hydrocarbons and mining. Reforms enacted by the administration of President Santos have improved the operating environment, streamlining bureaucratic procedures, providing incentives for investment, and lowering trade barriers. Ongoing peace negotiations with the Revolutionary Armed Forces of Colombia (FARC) are also improving the security outlook. Nevertheless, Colombia continues to pose significant challenges to investors, as the rule of law remains weak, facilitating criminal and terrorist activity and allowing corruption to flourish. In addition, trading costs remain extremely high due to an inadequate transport network, and burdensome employment regulations further weigh on profit margins. Consequently, Colombia is a regional underperformer in...

Colombia Crime & Security

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BMI View: Despite significant improvements in the last decade, Colombia still presents considerable security risks for businesses and expatriate workers in comparison with other Latin American countries. The primary security issues are also shifting, highlighting significant differences between the main cities and the more isolated rural areas, both in terms of the type and intensity of threats. Crime risks in major cities are being driven by the activities of criminal gangs which have emerged from demobilised paramilitary and insurgent groups. Terrorist activity is more common in peripheral regions, with attacks frequently targeted towards critical infrastructure such as oil pipelines, electricity transmission networks and bridges. While successful military campaigns and peace efforts are slowly reducing the terrorist threat, businesses are increasingly exposed to criminal activities such as extortion and kidnapping...

Colombia Labour Market

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BMI View: Colombia offers a large, urbanised and relatively healthy labour force which is particularly suited to businesses in labour-intensive, low skilled sectors. The country's labour market also benefits from a strong tertiary education sector which improves the skill set of a segment of the labour force. However, high labour taxes and social security contributions, powerful trade unions which have driven significant labour strikes in recent years, and poor school enrolment rates, weigh on Colombia's overall performance. Colombia therefore receives a total Labour Market Risk score of 53.7 out of 100, ranking the country 19th out of 42...

Colombia Logistics

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BMI View: Colombia's large and growing economy, as well as its considerable population, requires a well developed logistics network in order to sustain growth. The country offers an extensive and reliable utilities supply, and its ports enable strong connections to maritime trade routes, facilitating speedy trade times. However, the expansion of the mining and oil and gas industries has placed pressure on Colombia's utilities sector, particularly the security of the country's water supply. In addition, while growth of these sectors has helped to develop Colombia's transport network, creating extensive road, rail and sea connections, all would benefit from further...

Colombia Trade & Investment

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BMI View: Colombia offers one of the largest markets for investment in Latin America, with an economy driven by the hydrocarbons and mining sectors, and a significant consumer market which is benefitting from rising incomes. Economic reforms, bureaucratic efficiency, and the ongoing peace process with the Revolutionary Armed Forces of Colombia (FARC) have attracted increasing foreign direct investment (FDI) inflows. In addition, trade barriers are few and the government has pursued a policy of making free trade agreements with key economic partners. Nevertheless, significant risks remain to be overcome by investors, mainly stemming from the legacy of internal conflict, which has resulted in a weak rule of law and widespread institutional corruption. Nevertheless, in the overall BMI...

Colombia Industry Coverage (20)

Colombia Agribusiness

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BMI View: Colombia's agribusiness sector is being held back by a number of deep structural challenges - including the lingering consequences of internal armed conflict, structural inefficiencies, low competitiveness and poor policy choices. As a result, area cultivated and yields have stagnated over the past decade. But after several decades of disappointing growth in Colombia's agribusiness sector, the outlook for production and exports is brightening. The efforts made to resolve the conflict, coupled with the potential for upcoming agricultural reforms, have paved the way for the revival of Colombia's agribusiness. The coffee, fruits, sugar, palm...

Colombia Autos

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BMI View: A combination of a weakening peso and the likelihood of further interest rate rises in H116 both pose significant challenges to Colombia's new vehicle sales market in 2016. We are targeting a 3% increase in sales, with commercial vehicles set to outperform passenger cars.

Key Views

  • Vehicle sales have fallen sharply over 2015, against the backdrop of a slowdown caused by a drop in the global oil price.

  • In this weak environment, heavy trucks have proved the outperformers, falling by only 1.3%, compared to a 10.5% fall across the market as a whole.

  • We expect the outperformance by commercial vehicles over passenger cars to continue over 2016-2017, although passenger cars will continue to represent the lion's share of all vehicles sold in Colombia.


Colombia Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Colombia Consumer Electronics

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BMI View: We forecast the Colombian consumer electronics market to rebound modestly in 2016 following a period of sharp contraction in 2015 due to significant peso depreciation vis-a-vis the US dollar. The medium-term outlook is significantly stronger however, with the exchange rate expected to stabilise from 2016, enabling the Colombian consumer electronics market to return to a robust growth trajectory based on rising incomes and modernisation. This will allow vendors to tap into the relatively low penetration rates in key device categories such as PCs, smartphones and flat panel TVs. One potential risk we highlight is our expectation that oil revenues are set to head lower in the coming years, which will force the government into a...

Colombia Defence & Security

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BMI View: Talks between the Fuerzas Armadas Revolucionarias de Colombia (FARC) and the Colombian government continue on. However, with little real progress made on this front, along with the scandal of the FARC capturing and subsequently releasing a military General, these are unlikely to be resolved in the near future. BMI expects that the defence budget and the subsequent increase in GDP will be used mostly to improve/maintain the Colombian government's military and security forces rather than for new procurements.

As one of the...

Colombia Food & Drink

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BMI View: Growth in Colombia's food and drink industry will slow over 2016 due to weakened consumer purchasing power. Elevated inflation, currency depreciation and weak labour dynamics will continue to constrain household spending growth over our forecast period. Rising health-consciousness and an expanding middle class will present growth opportunities in higher value categories.

Food and Drink Spending
f = BMI forecast. Source: BMI, national sources

Key Trends & Industry...

Colombia Freight Transport

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BMI View: Despite a subdued outlook for Colombia's economy, we expect steady increases in agricultural output will ensure tepid growth in freight volumes in the coming years. We caution that a more robust expansion will be prevented by a slowdown in the consumer sector, weak global commodities and a lacklustre external picture. As a result, we expect the road and rail will display the largest gains vis-a-vis air freight.

The Colombian economy is set for a sharp slowdown in the coming quarters, as the country struggles in the face of weaker trade dynamics and slowing household spending. Indeed, after real GDP growth of 4.6% in 2014, we forecast expansions of just 2.9% and 3.4% in 2015 and 2016 respectively. Moreover, we expect real GDP growth will remain weak over the coming five years, averaging 3.4% compared to 4.8% in the past half decade, as the impact of...

Colombia Information Technology

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BMI View: Colombia is a market with great potential due to relatively low penetration rates for PCs, software and solutions. Our core scenario is for an IT spending CAGR of 4.5% over 2016-2020 as the economy strengthens, with a potential tailwind from the formal conclusion of government conflict with FARC. Colombia does however continue to be vulnerable to external shocks such as a lower oil price. This downside was demonstrated in 2015 when oil prices resulted in a sharp depreciation of the peso against the US dollar, and a marked contraction in demand for imported devices and solutions.

Latest Updates And Industry Developments

  • IT Hardware Sales: COP3....

Colombia Infrastructure

BMI View:

BMI View: PPPs will be the major driver for infrastructure construction growth over the coming years, as the Colombian government has been widely successful in using the model to attract private sector capital, especially into the 4G Highway Concession Program. Additional capital from international debt financing and newly creating infrastructure funds are helping to diversify funding sources for infrastructure and will be critical for maintaining robust growth in light of government fiscal constraints.

Latest Updates And Structural Trends

  • Colombia's construction industry will continue to outperform in the region, with the sector expected to reach 5.3% real growth in 2016 and average 5.7%...

Colombia Insurance

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BMI View: We have a positive long-term outlook for Colombia's insurance sector, with total premiums rising at an average rate of 9.3% over the 2016-2020 period. The coming five years should see an increase in demand for both life and non-life products as a direct result of rising average household incomes. Moreover, following important changes in the country's regulatory environment Colombia's insurance sector should see increased activity and investment by domestic and foreign providers.

Headline Insurance Forecasts (Colombia 2013-2020)
2013 ...

Colombia Medical Devices

BMI View:

BMI View: Political uncertainty, subdued economic acceleration ahead and depreciatory pressures on the peso will contain medical device market growth in Colombia. Imports will be slower over this decade than in the last, while exports will remain low despite the peso plunge. Multinationals will further consolidate the market, while stronger market competition will keep prices lower.

Projected Medical Device Market, 2015-2020

Colombia Mining

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BMI View: Mining sectors across Central America and the Caribbean will see varying growth prospects in 2020. The region has significant untapped mineral potential, yet a range of business environments and operational challenges will lead to uneven growth.

Select Countries - Mining Industry Value
2014e 2015e 2016f...

Colombia Mining

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BMI View: Colombia's coal sector will drive mining industry value growth, as major miners ramp up output to gain seaborne market share over the coming years.

Colombia Mining Industry Value Forecast (2014-2020)
2014 2015e 2016f 2017f 2018f ...

Colombia Oil & Gas

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BMI View : Colombia's energy sector is nearing an inflection point. While the past decade has witnessed strong production growth due to improvements in the business and security environment, we caution that the country will experience downward pressure on oil production over the longer term. The tendency toward smaller finds, as well as recent increases in pipeline attacks have begun to show signs of decreased investor interest in Colombia's resources, as witnessed in the 2014 licensing rounds. Furthermore, sustained lower oil prices have threatened the development of upstream and downstream projects by both national and international investors. Given...

Colombia Petrochemicals

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BMI View: The Colombian petrochemicals industry reported an overall solid growth performance in 2015, although rubber output was hit by a contraction in sales that was partly caused by a decline in output in the automotive industry. The refining sector is expanding with the potential for increased naphtha feedstock for petrochemicals, but this will be insufficient for any new cracker facility in the country.

The Colombian petrochemicals industry saw mixed results in 2015 with strong growth in basic chemicals and contraction in synthetic rubber. In 9M15, the real production index for basic chemicals and their derivatives grew by an average of 6.9% y-o-y on the back of 6.9% growth in the sales index. However, over the sale period the real production index for rubber slumped 10.2% y-o-y with the sales index declining 11.5%....

Colombia Pharmaceuticals & Healthcare

BMI View:

BMI View: Colombia's challenging regulatory regime will continue to limit the country's attractiveness to multinational pharmaceutical companies in the coming years. Despite the country's growing rates of medicine consumption, the increasing compulsory license risks and patent regulation burdens as well as substandard pricing controls will remain critical threats to pharmaceutical investment in the country.

Headline Expenditure Projections

  • Pharmaceuticals: COP9,101bn (USD3.31bn) in 2015 to COP9,581bn (USD3.19bn) in 2016; +5.3% in local currency and -3.6% in US dollars. Forecast unchanged from previous quarter.

  • Healthcare: COP59,373bn (USD21.6bn) in 2015 to COP64,442bn (USD21.5bn) in 2016...

Colombia Power

BMI View:

BMI View: A sharp fall in hydropower generation due to El Nino, coupled with a lack of domestically produced feedstock to ramp up natural gas-fired power generation, will raise a risk of power rationing in Colombia over Q1 2016. The country's robust pipeline of new hydropower and coal-fired power projects supports our positive growth outlook for the market over the long term, with new renewable energy incentives posing only limited upside potential to our forecast for the sector.

Headline Power Forecasts (Colombia 2014-2020)

Colombia Retail

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BMI View: Consumer confidence in Colombia remains dented as a result of the impact of lower commodity prices and the weak peso. Recent increases in both inflation and unemployment rates will do nothing to improve consumer confidence, further dampening household spending on non-essentials and larger retail purchases. With any significant improvements in the macroeconomic environment looking less likely this year, the strong growth potential of the Colombian economy will remain muted.

Headline Household Spending

Colombia Shipping

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BMI View: The healthy level of growth seen at Colombia's main ports in 2015 is a trend we anticipate to continue over not only the short but medium term. Short-term growth will be stymied slightly, however, by slowing growth in Colombia, which will affect domestic demand for goods transported by sea. In 2016, we forecast that the leading port in y-o-y tonnage and box terms will be the port of Cartagena, which will see y-o-y gains of 5.00% and 5.01%, respectively.

Key drivers underpinning our forecasts include the fact that Colombia's consumer confidence index reading plunged in August 2015, contracting by 0.4% in that month, which further underpins our view for slowing growth in Colombia, and an area for concern for the country's shippers as demand for goods transported via sea could fall going forward. With rising inflation cutting into consumer purchasing power, and consumer confidence...

Colombia Telecommunications

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Industry Trends – Mobile
e/f = BMI estimate/forecast. Sources: national sources, BMI

BMI View: We have made some minor forecast revisions for the Colombian mobile market in the Q416 quarterly report update. BMI holds the view that the mobile market is beginning to slow, having posted robust growth in the preceding years. The negative impact of inactive SIM discounting became modestly evident in 2015 and into 2016. Looking ahead, we maintain our...

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