- Colombia’s civil war continues, with left-wing rebels controlling large areas in southern and eastern Colombia, while right-wing militias are being disarmed by the government .
- The largest of these rebel groups, FARC, controls a territory the size of Belgium in southern Colombia.
- In recent years, the government has taken a hard-line with these rebels and, with the assistance of the United States, has launched a major offensive against the rebels in recent years.
- Colombia remains the largest source of hard drugs to North America, but the US-led Plan Colombia is designed to destroy much of Colombia’s drug producing capabilities.
- Colombia’s economy is dependent upon coffee and oil exports.
- Foreign investment is needed to diversify the economy, but will remain small until the civil war is brought to an end.
Key Facts and Data:
- Official Name – Republic of Colombia
- Capital – Bogota
- Government Type – Republic
- Head of State and Government – President Juan Manuel Santos (since 2010)
- Population – 47,699,000
- Land Area – 1,038,700 sq. km
- Total GDP (US$) – $282 billion
- Per Capita GDP at PPP (US$) – $14,130
- Currency – Colombian peso
Table of Contents
- Recent Political Events
- Recent Economic Events
- Other Recent Events Current
- Overview of the Current Government
- Leadership Profile
- Summary of the Most Recent Elections
- Leading Political Parties
- Forecast for the Next Elections
- International Relations Outlook
- Potential Conflicts
- Military Capabilities
- Key Political Issue
- Political Risk Outlook
- Economic Overview
- GDP Growth Forecasts
- Key Sector Forecasts
- Inflation Forecasts
- Foreign Trade Forecasts
- Foreign Investment Forecasts
- Exchange Rate Forecasts
- Outlook for Key Sector
- Key Economic Issues
- Economic Risk Outlook
Demographic and Environmental Outlook:
- Population Overview
- Population Characteristics
- Development of Leading Urban Centers
- Key Demographic Issue
- Topography and Climate Overview
- Environmental Threat Summary
- Key Environmental Issues
- Demographic and Environmental Risk Outlook
Colombia: Recent Political Events and Changes
Key Political Events and Changes:
- Conservative parties that are opposed to the government’s peace deal with the FARC rebel group did very well in March 2018’s parliamentary elections. The right-wing Democratic Center party, led by former President Alvaro Uribe, won the largest number of seats in the parliament on a platform of opposing President Santos’ peace deal with the FARC. Meanwhile, the new FARC political party fared poorly in these elections, winning just 0.4% of the vote. Nevertheless, the FARC is guaranteed five seats in each of the two houses of the parliament.
- Polls taken in recent months showed that the right-wing candidate Ivan Duque had surged ahead of his main rivals, the left-wing candidate Gustavo Petro and the centrist Sergio Fajardo, ahead of this year’s presidential election.
- President Santos announced that his government would resume peace talks with the left-wing ELN rebel group, following a six-week hiatus.
Colombia: Recent Economic Events and Changes
Key Economic Events and Changes:
- Colombia’s economy expanded by a disappointing 2.2% on a year-on-year basis in the first quarter of this year, the eighth consecutive quarter in which economic growth in that country was below 3%. Low commodity prices continued to hold down growth in what had been expected to be one of Latin America’s fastest-growing economies.
- The government forecast economic growth of 3.0% for Colombia in 2018.
- Colombia’s inflation rate remained unchanged at 3.1% year-on-year in April 2018.
- The country’s central bank cut interest rates by 25 basis points to 4.25% in April 2018.
• Colombia’s unemployment rate fell sharply to 9.4% in March 2018.
Other Key Events and Changes:
- In recent months, hundreds of thousands of Venezuelans crossed into Colombia in search of jobs, food or other basic goods due to the economic collapse in their country. This placed great strains on the areas of Colombia near to the border with Venezuela.
- The government announced plans to dramatically expand the amount of land in Colombia that will be set aside for national parks.
- In April 2018, Colombia’s largest drug gang, the Gulf Clan, carried out a bomb attack in northwestern Colombia that resulted in the deaths of eight police officers. As a result of this attack, President Santos ordered his country’s security forces to launch a major crackdown against the Gulf Clan, which is estimated to have as many as 1,800 members.
Colombia Political Outlook
Colombia: Current Government
- Colombia’s political system allows the president to wield most of the political power in the country.
- Former Defense Minister Juan Manuel Santos was elected president in 2010, replacing Alvaro Uribe.
- After taking office, President Santos brought in an almost entirely new cabinet, despite sharing many of the same policies as his predecessor.
- In April 2016, President Santos reshuffled his cabinet in a bid to boost the prospects of reaching a peace deal with the FARC rebel group. Many leading members of the previous cabinet retained their posts in the wake of this reshuffle.
Key Members of the Government:
- Head of State and Government – President Juan Manuel Santos
- Vice President – Oscar Naranjo
- Minister of Foreign Affairs – Maria Angela Holguin
- Minister of Finance – Mauricio Cardenas
- Minister of the Interior – Guillermo Rivera Florez
- Minister of Mines and Energy – German Arce
- Minister of Defense – Luis Carlos Villegas
- Minister of Justice – Enrique Gil Botero
Profile of Former President Juan Manuel Santos
President Santos was elected president in 2010, replacing popular President Alvaro Uribe, who was barred from seeking a third term in office by the country’s constitutional court.
- Prior to becoming president, he served as defense minister in the Uribe government between 2006 and 2009 where he took a hard-line against FARC rebels.
- His family has deep roots in Colombian politics, paving the way for his ascension to the presidency.
- President Santos was diagnosed with prostate cancer in late 2012.
- In 2014, President Santos won another term in office in an election that was dominated by the president’s efforts to reach a peace deal with the FARC rebels.
Key Policies and Stances:
President Santos made his name by calling for a greater effort to eradicate the FARC rebellion and was instrument in many of the successes the Uribe government had in their fight against the rebels.
- However, President Santos, once he took office, moved to launch peace talks with the FARC that were opposed by his predecessor.
- On the economic front, he has moved to invest more money and resources into improving Colombia’s infrastructure and in reducing the country’s level of unemployment.
Colombia: Most Recent Elections
Presidential Election – May and June 2014
Summary of the Last Elections:
The 2014 presidential election was dominated by the issue of the government’s peace talks with the FARC rebels.
- Former President Alvaro Uribe was staunchly opposed to these peace talks and gave his backing to opposition candidate Oscar Ivan Zuluaga.
No candidate won the 50% of the vote required to avoid a run-off election in the first round of voting in Colombia’s presidential election in May 2014.
- Surprisingly, President Santos finished only in second place with 25.6% of the vote.
- The first place finisher in the first round of voting was another center-right candidate, Oscar Ivan Zuluaga, who won 29.3% of the vote.
- Mr. Zuluaga was opposed to the government’s peace talks with the FARC rebels.
In the second round of voting in Colombia’s presidential election in June 2014, President Santos won a narrow victory.
- President Santos won 51.0% of the vote, while Mr. Zuluaga won 45.0% of the vote
Colombia’s Leading Political Forces: Liberal Party (PL)
The PL has traditionally been the leading party in Colombia.
- Only when the Conservatives held power from 1886 to 1930 was the PL out of power for a long period.
- However, the PL’s future looks increasingly uncertain thanks to the popularity conservative parties aligned with the country’s last two presidents.
Key Policies and Stances:
- The PL supports market reforms to liberalize the economy, but it once favored more social welfare policies.
- The PL will likely move more to the center-left to counter the rise of independent candidates on the right.
Having seen the demise of their traditional PSC rivals, the Liberals too must be concerned about their future in Colombia’s rapidly changing political landscape.
- However, the PL is still one of the largest parties in Colombia’s parliament, but it must assert its logistical and organizational advantages to defeat smaller rivals in the future.
Colombia’s Leading Political Forces:
Colombian Conservative Party (PCC)
The PCC is Colombia’s other major traditional leading political party.
- However, the emergence of Alvaro Uribe over the last decade erased much of the distinction between conservative groups.
- Nevertheless, the party remains the second-largest party in the country’s parliament.
Key Policies and Stances:
- The PCC supports some government involvement in the economy.
- The PCC has moved to take a more hard-line stance against Colombian rebel groups as the party has weakened.
The PCC has failed to find a leader who can challenge for the leadership position of Colombia’s political right in recent years.
- Moreover, the party has already split into various factions and it remains to be seen who will consolidate the center-right in Colombia
Colombia’s Leading Political Forces:
Social Party of National Unity
The Social Party of National Unity, or the Party of the U, is the leading party in Colombian politics at present.
- The party was formed as a vehicle to support former President Alvaro Uribe and is now led by President Juan Manuel Santos, who was elected president in 2010.
- The party is also the largest party in Colombia’s parliament.
Key Policies and Stances:
- The party’s economic policies are focused on attracting more investment to Colombia through lower taxes and more support for the country’s business sector.
- The party also takes a hard-line stance towards the FARC rebels, vowing to crush the rebels and bring an end to their decades-long insurgency.
It remains to be seen if President Santos will be able to maintain the party’s unity to the degree that President Uribe was able to do.
- If he cannot, there is a risk that the party will fragment, as it has been based on personalities as much as on policies and ideas.
Key Political Issue in Colombia
Colombia’s Civil War
Between 1948 and 2010, Colombia has known only seven years of peace.
- The country’s civil war has ravaged the economy and killed thousands of people.
- The fighting has even spread to neighboring countries, as evidenced by the 2008 raid on a FARC rebel base in Ecuador.
The latest incarnation was a three-way war between the government, left-wing rebels and right-wing paramilitary forces.
- Most of the financing for these non-government forces comes from drugs.
- The government’s harder line against left-wing rebels has convinced many right-wing militants to lay down their arms in recent years.
- Moreover, the Colombian armed forces have maintained the pressure on the FARC rebels in recent years, driving them deeper into the jungle.
The Elected Government In recent years, the government has stepped up efforts to defeat the rebel groups.
The United States The US gov’t. is backing the government against drug producers (which finance the rebels).
FARC Based mostly in the south, these left-wing rebels now are financed through drug sales.
ELN A smaller left-wing group known for kidnapping western businessmen.
AUC This right-wing faction controls areas of northern Colombia and has fought rebels and the gov’t.
Colombian society’s rigid divisions ensure that civil conflict will continue in some form, even if the government succeeds in destroying the various rebel factions.
The United States initiated “Plan Colombia” in 2000 under President Bill Clinton.
- The program has provided Colombia with major amounts of military and economic aid from the United States.
- The program’s objectives are to curtail drug production and defeat rebel groups controlling large areas of Colombian territory.
- Colombia is the source of more than half of the world’s cocaine and is a growing source of heroin.
Thus far, much progress has been made as a result of Plan Colombia.
- Right-wing rebel groups have largely disarmed after reaching deals with the government.
- Coca and opium output has fallen, although this decline has been uneven.
- Left-wing rebel groups are under increasing pressure from US-trained Colombian forces.
- The recent peace talks between the government and the FARC rebels was due in large part to the improved capabilities of the Colombian armed forces.
Plan Colombia has been a success, so far. However, the threat of an upswing in violence in Colombia remains firmly in place. Furthermore, this project will only curtail drug production if other countries in the region such as Peru and Bolivia also take steps to reduce drug output.
Colombia: International Relations Outlook
Key International Disputes:
- Colombia’s unrest has often spilled across its borders into neighboring countries.
- One particular worry for the right-wing government in power in Colombia is the fact that it is surrounded by left leaning governments, including a hostile government in Venezuela.
International Relations Outlook:
- The government will maintain close ties with the United States in its bid to end the long-running civil war in Colombia.
- Furthermore, Colombia’s war on the drug trade will continue to be the focus of much international attention.
Colombia: Political Risk Outlook
- Colombia faces some of the highest political risk levels in the Western Hemisphere as a result of the country’s ongoing civil war.
- However, the conservative government has taken the first steps to reduce this risk by increasing the pressure on the various militant groups that have destabilized Colombia.
- If a peace deal could be reached between the Colombian government and the far-left FARC rebels, political risk levels in Colombia would fall sharply.
Colombia: Economic Overview
Colombia’s natural resources remain the basis for the country’s economy.
- A substantial oil and gas industry exists as well as large mining operations.
- Colombia is also one of the world’s leading coffee producers.
Political unrest has severely hindered Colombia’s economic expansion.
- Outside of the few key industries, foreign investment has been held back by the threat of political unrest.
- The service and manufacturing sectors hold great potential, but this will not be realized until peace is achieved.
- Meanwhile, Colombia has one of the most liberal economies in the region.
Until long-term peace is achieved, Colombia will remain dependent upon oil and coffee exports. • This will continue to leave Colombia exposed to external forces out of its control.
- If peace can be reached, Colombia has tremendous potential to become a center of manufacturing and tourism, helping to diversify the country’s economy.
Colombia: Wealth Comparisons
Key Wealth-Related Issues and Trends
Poverty is a major problem for Colombia, as economic growth has remained relatively low.
Colombian wealth levels have fallen sharply due to the country’s political unrest of previous decades.
Wealth disparity levels in Colombia are among the largest in the world.
Colombia could be a much wealthier country if not for its devastating civil war. However, given the fact that peace is unlikely, and population growth will continue to be substantial, Colombia’s per capita GDP is likely to remain low for the foreseeable future
Colombia: GDP Growth Outlook
- Economic growth rates held steady in 2013 and 2014 as export demand for Colombian natural resources has not grown as had been hoped.
- However, a sharp fall in the price of oil and other natural resources led to much lower rates of economic growth in recent years.
- Colombian growth will trend upwards later in the forecast period as foreign investment levels rise together with improved political stability.
- As always, peace and security will be the keys to sustainable growth in Colombia.
Colombia: Key Economic Sector
The Coffee Industry
Colombia’s coffee industry is under threat from growing foreign competition.
- Brazil remains the world’s dominant producer.
- Asian countries such as Indonesia and Vietnam are rapidly expanding their output and both countries have overtaken Colombia is terms of coffee production in recent years.
Colombian coffee is the most expensive to produce in the world.
- Major competitors have far lower labor and logistics costs than Colombia.
Colombia’s coffee industry will continue to fall behind international competition. • Moreover, the country’s massive advertising campaigns promoting the quality of Colombian coffee have failed to stem this decline and the government has decided to scale back on these promotions.
Colombia: Key Economic Sector
The Oil and Gas Industry
Colombia’s oil and gas industry has rebounded in recent years, with output rising sharply. • Before the recent boom, the government has warned that Colombia could become an oil importer in the coming years.
- This led to the government aggressively trying to attract more foreign investment in the field of oil exploration.
Meanwhile, most experts believe that new finds will be made in Colombia as large areas have yet to be explored for oil.
- However, the political risk levels involved have been too high for most companies.
Colombia’s oil industry has new hope thanks to new oil discoveries and an improving political climate in Colombia.
- While exploration projects will attract more foreign investment, the future of the industry depends upon finding new oil fields in Colombia.
While Purchasing power levels in Colombia remain well behind those of Latin America’s larger economies, the gap has narrowed in recent years and is forecast to continue to do so over the course of the next few years.
Colombia: Inflation Outlook
- Inflation fell sharply in previous years as the government has managed to bring prices under control.
- However, a weak currency led to a spike in inflation in recent years.
- Currency fluctuations and energy prices in the long-term hold the risk for future rises in the inflation rate later in the forecast period.
Colombia: Foreign Trade Overview
The United States in the dominant trading partner with Colombia, though potential trade with Colombia’s neighbors is significant. The current account balance continues to be affected by lower oil prices, though both hold the potential for increased output if more foreign investment can be attracted to those sectors.
Colombia: Foreign Investment
Foreign Investment Climate:
The political unrest in recent decades had deterred most foreign companies from investing in Colombia.
- Only the oil and mining sectors have received large scale foreign investment to date.
Colombia has one of South America’s most liberal foreign investment regimes.
- Peace will lead to a drastic upsurge in foreign investment, if it can be achieved.
- Nearly all political parties in Colombia support liberal foreign investment laws.
Outlook For Future Foreign Investment:
If long-term peace and stability could be achieved, Colombia would have the potential to be one of the leading FDI recipients in the Western Hemisphere.
- With a growing population, strategic location and access to the US market, Colombia has the potential to be a center of export and domestic-oriented operations, similar to Mexico.
In 2014 and 2015, the peso suffered a sharp depreciation against the US dollar and many other currencies, before rebounding slightly in 2016 and 2017. Looking ahead, the peso is forecast to stabilize against the US dollar and most other major currencies.
Colombia: Labor Force
Labor Force Overview:
Colombia’s high rate of unemployment is a key issue facing the government.
- More jobs need to be created, particularly for Colombia’s growing urban population.
Colombia’s high unemployment and small labor unions have resulted in a weakening of the position of workers.
- This has resulted in relatively low pay rates for unskilled labor in Colombia.
Violence is a major problem for Colombian labor.
- Many union leaders have been murdered in recent years.
Outlook For the Labor Force:
Colombian unemployment rate has stagnated in recent years due to the economic slowdown during this period.
- Job creation will be a key factor in allowing stability to take hold in Colombia in the years ahead.
Fiscal Policy Overview
Current Outlook :
- The government’s fiscal balance has fluctuated wildly in recent years.
- Lower economic growth rates led to a sharp increase in Colombia’s fiscal deficit in recent years.
- Colombia’s fiscal deficit is forecast to remain high over the near-term, before declining later in the forecast period as a stronger economy raises government revenues.
Forecast Assumptions and Risk
Near-Term Global Growth to Remain Stable The near-term forecast for the global economy calls for overall economic growth rates to remain near current levels, with developed economies continuing to grow faster than in previous years.
Mid-Term Economic Risk Levels to Rise A number of risks (share price corrections, Chinese debt, political gridlock) will rise to more dangerous levels by 2019, jeopardizing the recent run of steady growth for many large economies.
Asia Drives Global Growth Asian emerging markets, led by China, India and Southeast Asia, will generate nearly half of the world’s economic growth over the near- and midterm.
Stability Spreads In the wake of the peace deal between the government and the FARC rebels, stability will spread to more areas of Colombia.
A Global Power Vacuum Whether by design or due to internal political unrest, the United States’ ”America First” policies are resulting in power vacuums forming in many of the world’s most volatile regions.
Major Power Conflicts The risk of conflicts between large- and mid-sized powers is rising in the Middle East, Asia and East Europe, and any of these could have the scale needed to severely disrupt the global economy.
New Rebellions While peace has come to much of Colombia, the potential for new uprisings against the government, and of lawless areas of the country, could rise in the coming years.
Even Lower Natural Resources Prices A further decline in the price of oil and other natural resources would lead to a major economic slowdown in Colombia.
Colombia: Economic Risk Outlook
- Political instability has also led to higher economic risk levels as it has severely limited potential foreign investment in Colombia and limited the government’s ability to promote economic development.
- Furthermore, Colombia’s key export revenue generators, such as coffee, are facing increasing pressure from international competition that is threatening to lower prices to dangerously low levels.
Colombia Demographic and Environmental Outlook
Colombia’s population growth will make it easily the second most populous country in South America as well as the second largest Spanish-speaking country in the world. However, without a long period of peace and stability, this growth will result in nothing more than poverty and misery for most new Colombians.
With one of the highest birth rates in Latin America, Colombia has experienced rapid population growth. This has resulted in one of the youngest populations in the region and this will remain the case for the foreseeable future.
Composition of Colombia’s Population
Mestizos (mixed white and Amerindian) make up over half the population of Colombia.
- Unmixed whites, who make up a further twenty percent, comprise most of the country’s upper class.
- Much of the black and mixed-black population live along the Pacific coast and in larger cities.
Spanish is the official language of Colombia.
- More than 40 Amerindian languages are also spoken in Colombia.
- English is compulsory in school and spoken by most educated people in Colombia
The Roman Catholic Church is the official state religion of Colombia.
- Though church attendance is declining, the Roman Catholic Church still wields a great deal of power in the country.
Colombia: Leading Urban Centers
- Colombia’s main urban areas have all experienced rapid population growth in recent decades.
- Bogota remains Colombia’s dominant cities, but populations have also risen rapidly in cities such as Medellin, Cali and Barranquilla.
Key Demographic Issue in Colombia
Colombia’s population growth has seen it pull away from Argentina and Peru as the second most populous country in South America.
- This is the result of high birth rates that existed in the country until the 1970s.
Beginning in the early 1970s Colombia enacted a series of government-sponsored family planning programs.
- The effects of these programs began to really be felt in the 1980s.
- Other factors, such as industrialization and urbanization have also helped contribute to Colombia’s declining birth rate.
Colombia’s family planning programs may have saved the country from unmanageable population growth. Nevertheless, Colombia’s population in 2050 will be more than 40% higher than it is today.
Colombia: Key Social Issue
Demographic Risk Outlook
- Social risks, such as crime, are at dangerous levels in Colombia and threatening the future of the country
Environmental Risk Outlook:
- Colombia is at risk of major natural disasters, with many occurring in recent decades