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- GDP (PPP):
- $667.4 billion
- 3.1% growth
- 4.6% 5-year compound annual growth
- $13,847 per capita
- Inflation (CPI):
- FDI Inflow:
Colombia has maintained strong economic fundamentals, including macroeconomic stability and openness to global trade and finance. The relatively sound economic policy framework has contributed to economic expansion averaging over 4.5 percent annually over the past five years. Recent reforms have focused on regulatory improvements and fostering a stronger private sector. A founding member of the Pacific Alliance, Colombia has free trade agreements with the U.S. and many other nations.
More sustained growth in economic freedom will require deeper institutional reforms that include better protection of property rights and strengthening of the judicial system. Corruption remains a problem in many sectors of the economy.
A large, geographically and ethnically diverse country in the northwestern corner of South America, Colombia is Latin America’s oldest democracy. A costly five-decade guerilla insurgency, principally led by the leftist, narco-funded Revolutionary Armed Forces of Colombia (FARC), caused hundreds of thousands of casualties. President Juan Manuel Santos, reelected in 2014, made peace with the FARC his top priority and signed a cease-fire in June 2016. In an October 2016 referendum, however, skeptical voters narrowly rejected the controversial final peace treaty that would have mainstreamed demobilized FARC members, given them impunity for past crimes, and allowed them to run for political office.
Property rights are recognized and generally enforced. The justice system is compromised by corruption and extortion, although the Constitutional Court and the Supreme Court have shown independence from the executive in recent years. Drug trafficking and the violence and corruption that it engenders continue to erode institutions. Colombia was ranked 126th for corruption and 134th for security in the World Economic Forum’s 2016 Global Competitiveness Index.
The top individual income tax rate is 33 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax and a financial transactions tax. The overall tax burden equals 16.7 percent of total domestic income. Government spending has amounted to 29.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.8 percent of GDP. Public debt is equivalent to 49.4 percent of GDP.
Simplified procedures for establishing and running a business have improved the efficiency of the overall business environment. The regulatory framework is generally conducive to private business activity and job growth, but reforms are needed to lower nonwage costs. A May 2016 IMF report reflects that Colombia has made progress in bringing its subsidies in line with “OECD best practices” except for increased spending on housing subsidies.
Trade is moderately important to Colombia’s economy; the value of exports and imports taken together equals 39 percent of GDP. The average applied tariff rate is 4.2 percent. Foreign and domestic investors are generally treated equally, but investment in some sectors of the economy is restricted. Domestic banks continue to dominate the banking sector, although the presence of foreign banks has increased.