Colombia: Third Latin American Economy
Foreign investors have yet another reason to designate the country as their next investment destination. After meeting with leading entrepreneurs and executives during the World Economic Forum, the President of Colombia, Juan Manuel Santos, announced that “Colombia was officially acknowledged in Davos as the third Latin American economy”.
This recognition was based on data issued by the Ministry of Treasury of Colombia, which indicates Brazil's Gross Domestic Product (GDP) to be $1.932 trillion USD, while Mexico’s GDP is $1.209 trillion USD, Colombia’s GDP is $344 billion USD, and Argentina’s GDP is $338 billion USD.
This growth is the result of a variety of factors: Colombia has strengthened its yearly economic growth, showing increases greater than 5%, which has translated into greater job creation (58% of the population is employed); and in the last few years, 2.5 million people have risen above the poverty line, according to data by The National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadistica, DANE).
Improvement in this indicator allows this segment of the population to afford different goods by gradually increasing their purchasing power. For example, the GDP per capita has doubled in the last decade, rising from $5,826 USD in 2003 to $10,910 USD in 2013, according to data by the Economist Intelligence Unit, following the methodology of the World Bank.
Colombia’s economic prosperity and its latest achievements, (e.g., climbing from the fourth to the third economy in the region), are determining factors that will expand the middle class.
Currently, this segment comprises 25.3% of the population (11.6 million people) and, according to estimates by the Foundation of Higher Education and Development (Fundacion para la Educacion Superior y el Desarrollo, Fedesarrollo), this figure will rise to 37.3% (19 million people) by 2020, and by 2025 it will reach 46.3% (24.7 million people).
In addition, legal and economic stability will consolidate Colombia as a Foreign Direct Investment-friendly destination with business opportunities available for the manufacturing, services, and agribusiness sectors.