Market Overview

Colombia ranks solidly with the group of progressive, industrializing countries worldwide that have well-diversified agriculture, resources, and productive capacities.  Currently, Colombia is the fifth largest market for U.S. exports in the region, after Mexico, Brazil, Venezuela, and Chile, and is ranked 29th as a market for U.S. exports globally.  Since the election of President Alvaro Uribe in May 2002 (and subsequent re-election in 2006), Colombia has become one of the most stable economies in the region.  Improved security, good government policies, steady growth, controlled inflation and a wide range of opportunities combined with a relatively stable political environment vis-à-vis neighboring Andean countries, make it worthwhile for U.S. exporters and investors to take a serious look at Colombia.  Colombians are passionate about furthering economic growth in their country and committed to increasing trade and U.S. exports between the U.S. and Colombia.

Facts to consider:

• Economic growth for 2006 was a healthy 6.8 percent with expected 2007 economic growth to reach seven percent.  GDP per capita has increased significantly (estimated at five percent) to over $3,260 US aided by the appreciation of the Colombian peso (COP) in the last year (approximately 11.5 percent).
• For 2007, the exchange rate closed at COP 2014.76 per $1 US. 
• Net Foreign Direct Investment (FDI) in Colombia for 2007 is projected to reach $8 billion US.  U.S. FDI in 2006 was $1.5 billion US and for the period January-June 2007 U.S. FDI in Colombia reached $878 million US.  U.S. investment is particularly strong in the mining, oil, and gas sectors.
• Construction industry activity increased 14.5 percent particularly in cities like Bogotá, Medellín, Cartagena, and San Andres.  According to International Trade Administration reports, construction equipment accounted for ten percent of the total U.S industrial exports to Colombia in 2006, totaling over $492 million US. For additional information refer to the Best Prospect, Chapter four.

• During 2006, Colombian exports to the United States reached $9.2 billion US, and exports from the United States to Colombia totaled $6.7 billion US.  Colombia currently ranks 29th as a trading partner for U.S. goods.  This follows the stable growth in tourism and construction of hotels and housing units in Bogotá and especially in coastal cities like Cartagena, San Andres, and Santa Marta.

• Consumer price inflation rose from 4.48 percent in 2006 to 5.69 percent in 2007.
• Unemployment in Colombia is at its lowest level in a decade.
• Although security concerns continue to stem from the 40-year-old guerrilla conflict, the Uribe Administration’s policies have dramatically reduced terrorist attacks, kidnappings and crime.  Consequently, U.S. businesses are visiting Colombia in record numbers to seek opportunities in a myriad of sectors.  Bogotá was recently rated in the top 50 cities to visit by the New York Times. 
• The U.S. Trade and Development Agency (U.S. TDA) selected Colombia as the Country of the Year for 2007, reflecting the success of the agency's efforts to craft solutions to development challenges and open markets for trade and increased U.S. exports.  U.S. TDA investments in Colombia produced around $350 million US in U.S. exports related to the implementation of telecommunications, energy, and transportation projects.
• The Colombian Government is making an effort to improve telecommunication regulation and costs.  The Telecommunications Regulatory Commission (CRT) approved a regulation in December 2007, requiring mobile phone operators to reduce interconnection costs by about 50 percent.  This is not price regulation but rather regulation of access charges for network use.  Prior to this decision one operator paid another close to COP 250 per minute or 12.5 cents U.S., for on network calls, and now that cost cannot exceed COP 123.74 pesos or 6.2 cents U.S., making Colombia’s interconnection rates among the lowest in the hemisphere.  These rate reductions apply to all calls between mobile operators and also for long distance calls on those networks.  The decision corrects a distortion in the market, which benefited the biggest operator (Comcel) a subsidiary of Mexico’s América Móvil (owned by Mexican billionaire Carlos Slim).

Improved Internet Business practices.  A key indicator of a country’s level of economic development is its use of new technologies, and in particular of Internet applications.  In this regard Colombian companies (in all sectors) have become quick at adopting Internet based business practices, such as marketing and sales management, and also of administrative management incorporating Voice over IP (VoIP) and mobile applications.