Latin America & Caribbean
Colombia
Colombia has a track record of prudent macroeconomic and fiscal management, anchored on an inflation targeting regime, a flexible exchange rate, and a rule-based fiscal framework, which allowed the economy to grow uninterrupted since 2000. Also, Colombia halved poverty over the past ten years.
However, productivity growth is low and it has actually been a drag on economic growth. A large infrastructure gap, low skill levels, low trade integration and barriers to domestic competition are among the factors that weigh on total factor productivity. Exports are highly concentrated in non-renewable commodities (oil in particular), which increases the exposure of the economy to price shocks. Finally, Colombia is one of the countries with the highest income inequality and labor market informality in Latin America. After accelerating to 3.3% in 2019, economic growth was on track to accelerate further in 2020, but the COVID-19 pandemic hit the economy hard, causing the worst recession in almost half a century.
The Government responded promptly to the crisis and took decisive actions to protect lives and livelihood, and to support the economy. On the fiscal front, the Government announced a sizable fiscal package for 2020 and 2021 totaling over almost 3% of 2019 GDP, to provide additional resources for the health system, increase transfers for vulnerable groups through the expansion of existing programs and the establishment of new ones (Ingreso Solidario, an unconditional cash transfer program, and VAT reimbursements for low-income segments of the population), delayed tax collection in selected sectors, lower tariffs for strategic health imports, and help for hard-hit firms to pay employees (Programa de Apoyo al Empleo Formal, PAEF). In addition, the government also set up special lines of credit and loan guarantees for firms in sectors that have been deeply affected by the crisis. To ensure adequate fiscal support, the suspension clause of the fiscal rule was activated for 2020 and 2021. On the monetary front, the central bank cut its intervention rate by 250 basis points between March and September and reduced it to its lowest historical level. In addition, it introduced a broad range of measures to increase liquidity.
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Technology and Communications, Renewable Resources and Alternative Energy, Infrastructure
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How is this information gathered?
SDG Investor Maps employ an 8-step methodology, combining data research and stakeholder consultations to identify Investment Opportunity Areas (IOAs) and potential business models with significant financial and impact potential.
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