Posted on February 25, 2017 9:20 am
Categories: New Economy

How Peace is Key to Colombia’s Economic Wellbeing; Long-term Strength and Short-term Improvements (E)

[…] Finally, there will be an acceleration in private investment. Gross fixed investment saw a disappointing 2% drop in 2016. The EIU’s statistics outline an expectation of 2% growth in 2017 and 3.4% in 2018. This is very much in line with lower levels of consumption.

Fundamentally, Colombia’s economic performance is strong. Investor confidence remains high, and total foreign direct investment has seen a fivefold jump in direct investment (from $2bn to $10bn per year) since 2001. Colombia needs to continue to make meaningful reforms to secure its status as Latin America’s star. Previous reforms have transformed Colombia, as Newsweek puts it, from “a crime and drug-addled candidate for failed state to a prospering dynamo.”

A final peace settlement that is accepted by all actors, most notably the people, will be the greatest fillip possible for Colombia’s economy. The World Bank, for example, has argued that had Colombia not been entrenched in civil conflict for the last 20 years, “income per capita could have been 50% higher.”

The major determinant of Colombia’s future success, therefore, remains how its civil conflict ends. Peace would be a boon for the nation’s war-ravaged farming and agricultural sectors, and further signal that Colombia is safe for international investment. Market Mogul