International Trade in Colombia

News Related to International Trade in Colombia

Business outline for Colombia

Main Industry Sectors

Agriculture represents 8.5% of the GDP and employs more than 18% of the active population. Due to the climate and the topography of the country, agriculture is extensive and very varied, and contributes to 75% of the export revenues. Colombia's main crops are coffee, bananas, cut flowers, cotton, sugarcane, livestock, rice and corn. The cultivated lands hardly take up 8% of the country's total surface area. Colombia has also many natural resources such as coal, oil, natural gas, iron ore, nickel and gold.

Industry represents around 36% of the GDP and employs nearly 20% of the population. Colombia's main industries are textile, chemical products, metallurgy, cement, cardboard containers, plastic resins and beverages.

Colombia's main economic sector is the services sector, which represents more than 55% of the GDP and employs nearly 60% of the active population.

Economic Overview

After two consecutive years of a growth rate higher than 6%, Colombia's economy had to endure the effects of the global economic crisis (collapse in prices of export products, reduction of the American demand) and recorded a growth of 0.8% in 2009.  However, the growth revived vigorously in 2010 (4.7%) supported by the increase on public expenses favoring investment and consumption. 

The authorities have taken measures to preserve the public finances (in a chronic deficit), mainly by imposing restrictions in issuing bank credits and by keeping the stability of the macro-economic indicators.  The new government of president Santos has launched an ambitious program of reforms aiming to reinforce taxes, to improve the management of territorial income drawn by royalties, to increase competitiveness and to control the Peso appreciation.  The fight against poverty and the development of real estate are also part of the priorities. 

Under the effect of the crisis, the unemployment rate reached 12% of the active population, and more than half of the Colombian people continue to work in the informal sector.  The purchasing power of Colombians has decreased, the rise in the cost of living is around 7.5%.  The poverty level remains high (45%), inequalities are strong and despite the retreat of the guerrillas, the internal conflict persists, which was the origin of the expatriation of more than 3 million persons.

FDI in Figures

The improvement of  the security conditions during these recent years has contributed to re-establish investor's confidence.  FDI inflows have attained a record level in 2008.  Despite a slowdown of FDI flows in 2009 due to the global economic crisis, foreign investors remain present in Colombia.  The two main destinations of FDI are the hydrocarbon and mining sectors, but a diversification of FDI has been observed in the last recent years. 
The negotiations that Colombia has done by signing free-trade agreements and the establishment of special regulations in the free zones have contributed to improve the country's appeal.  Moreover, the richness of its natural resources, a significant domestic market, an open and stable legal frame and its reputation as an exemplary debtor are some of Colombia's major assets.

FDI Government Measures

Today the Colombian government is reaping the fruits of the policy it implemented to secure democracy, whose objective is to create favourable economic conditions in order to once again, give investors confidence, especially foreign investors. The government has put efforts into concluding free trade agreements, namely through an association agreement as well as a series of agreements in the area of investments in the European Union, aimed at developping a stable and transparent economic environment in which contributions in capital can prosper.

Country Strong Points

The country's main strong points are:
- Its economic stability: Despite the crisis, the government was able to maintain its growth at 2.5%;
- Its political stability: Contrary to what is believed, Colombia's democracy is the oldest and most stable on the South American continent;
- Recovered foreign investor confidence: Foreign investment increased significantly and reached USD 6.295 million in 2006. More than 700 multinational companies launched investment programs in Colombia;
- Qualified and competitive human resources: Colombian workers are amongst the best qualified in Latin America. In effect, the country has a very good education system and the literacy rate is around 95%;
- A Strategic Geographic Location: Colombia is a strategic point between the different markets of the region. The country has modern port facilities on both the Pacific and the Atlantic oceans, which facilitates trade with European countries, the United States, or Asian countries;
- Its status as an export platform: Through various free trade agreements it has made, Colombia has access to a market of almost 1,200 billion people;
- Numerous development centers;
- Infrastructures which are both numerous and modern.

Country Weak Points

Although a sharp improvement was noted regarding security matters, violence remains the country's principle weak point. Colombia is also the primary producer of coca in the world. According to the Ducroire company, commercial risk is ranked at C, which is a very high level.

Foreign Trade Overview

Colombia's foreign trade represents about one third of the GDP. Colombia has signed trade agreements  with Chile, the CAN countries (Andean Community), MERCOSUR countries, Central American and Caribbean countries, and the European Union. It has also signed free trade treaties  with Chile, Guatemala, Honduras, El Salvador, Canada, Mexico, Switzerland, Norway, Iceland, Liechtenstein and the United States. 
The country mainly exports oil, coal, coffee, flowers, textile products, ferronickel, bananas and chemical products. Its main clients are the United States, Venezuela and the Netherlands.  Imports are constituted mainly of machinery and equipment, grains, chemical products, transport equipment, electric and electronic equipment.  Colombia's main suppliers are the United States, China, Mexico and Brazil.  Colombia's trade balance has seen its surplus increase in 2010.  The political tensions with Venezuela, who penalizes Colombian exports, could always play a negative role in this balance surplus.