The Republic of Colombia has the fourth largest economy in Latin America, after Brazil, Mexico, and Argentina, and the third largest population with approximately 51.5 million inhabitants. The country boasts five major commercial hubs: Bogota, Medellin, Cali, Barranquilla, and Cartagena. In contrast to many Latin American countries which have only one or two major cities, Colombia offers U.S exporters access to multiple commercial centers, each of which has its own American Chamber of Commerce. While these cities and many other secondary cities offer unique market opportunities, they are close enough via air routes that it is common for U.S. firms to have one partner (agent, distributer, or representative) cover the entire country.
Colombia is a country of micro and small businesses. According to the Ministry of Labor, these businesses represent more than 90 percent of the national productive sector and 80 percent of employment. Colombia’s National Department of Statistics reported unemployment averaged 11.2 percent in 2022. The country has a relatively low English proficiency level with most day-to-day business being conducted in Spanish. The Colombian economy grew by 7.5 percent in 2022, the highest growth in the hemisphere among OECD countries and the second-highest growth rate within the OECD as a whole. Colombia also had its highest annual inflation rate in 20 years of 13.1 percent.
An OECD economic survey of Colombia was published in February 2022. The report states Colombia’s economy has recovered well from the COVID-19 pandemic, but that the labor market remains weak. Colombia has one of the highest levels of poverty, income inequality, and labor market informality in Latin America. At the end of 2021, 47 percent of the urban workforce was working in the informal economy, with the national average hovering around 60 percent.
The Economist Intelligence Unit assessed that after Colombia’s strong growth in the first quarter of 2023, the economy will contract in the second quarter and will have modest expansion over the remainder of 2023. GDP is expected to recover to 3.3 percent in 2024, assisted by disinflation and monetary easing, which will support household consumption. Inflation has likely reached its peak for 2023 and will likely subside due to monetary tightening.
The U.S.-Colombia Trade Promotion Agreement (CTPA), in effect since May 2012, initially gave a boost to U.S. exports to Colombia, but the growth rate has slowed in recent years due to a combination of factors. Relative to the Colombian peso’s long-run average, the peso has been under pressure due to Colombia’s deficit and political uncertainty.
In 2022, Colombia was designated by the United States as a Major Non-NATO Ally, the third country in Latin America with this distinction. This increased opportunities for security assistance and trade. U.S. President Biden and Colombian President Petro met at the White House in April 2023. Both agreed to collaborate on issues related to decarbonizing the economy, climate change, and trade.
In 2022, U.S. exports of goods and services to Colombia were USD 28.9 billion, up 19 percent from 2021, and imports from Colombia were USD 25 billion, up 43 percent from 2021. As a result, the U.S. trade surplus with Colombia decreased to USD 3.8 billion. In 2021, direct investment from Colombia in the United States was USD 1 billion, an increase of 11 percent from 2020. U.S. direct investment in Colombia was USD 6.8 billion, a decrease of 0.6 percent from 2020. Colombian owned companies in the United States employed approximately 104,000 people.
In June 2022, Colombia elected the first leftist president in the history of the country. In his first year in office, President Gustavo Petro, has prioritized reforms in tax, health, pension and labor. The Colombian Congress approved his reform agenda in May 2023 for a four-year-development plan and an expansion of social protections. Colombia also increased the minimum wage by 16 percent in 2022.
President Petro has publicly stated a desire to restoring diplomatic and commercial relations with Venezuela. He has also publicly stated his commitment to maintaining relations with the United States, especially on issues related to the fight against climate change and negotiating a peace deal with drug-traffickers and guerrilla groups.
In October 2022, the Colombian Congress approved the first part of Petro’s “Total Peace” plan, which seeks to end violence, through negotiating peace with smaller guerrilla groups, that have continued to impact communities in several regions of the country.
Visit the State Department’s website for background on the country’s political and economic environment.