Colombia has maintained macroeconomic stability through strong institutions, including a modern inflation-targeting regime, exchange rate flexibility, and fiscal rules. However, while economic growth has been steady, it remains insufficient. Productivity growth has stagnated for the past two decades, hindering convergence with high-income economies and slowing progress in reducing territorial and social inequalities.
Despite its strategic location and multiple trade agreements, Colombia's limited global integration constrains export diversification beyond commodities. Higher productivity growth requires investments in infrastructure, more efficient public services, a more equitable tax system to encourage private investment, and a more open business environment to foster competition and innovation. Inclusive growth and reduction in social and geographic inequalities, in turn, depend on accelerating productivity, strengthening social security and labor markets to create jobs, and enhancing the capacity of subnational governments capacity and the efficiency of fiscal transfers to better support the most vulnerable.
The economy grew 1.7 percent in 2024 after growing 0.7 percent in 2023, driven by private consumption and modest investment, as inflation decreased and interest rates fell. Poverty declined slightly to 31.3 percent of the population, with regional disparities persisting. Colombia¡¯s economy is projected to grow 2.4 percent in 2025 and reach its potential growth rate of 2.9 percent by 2027, driven by private consumption and mildly rising private investment. Uncertainty around the pace of fiscal consolidation and policy environment, as well as external trade and financing shocks pose risks to the outlook.
An orderly, gradual and fiscally responsible transition towards a more diversified and climate-resilient economy, aligned with the country¡¯s ambitious climate goals, would support both long-term economic prospects and environmental sustainability.
Last Updated: Apr 23, 2025
