Colombia Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

Why you should buy this report

  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Colombia Country Risk Report
Product Price
$1,195.00

Core Views:

  • Persistent weakness in benchmark crude prices will continue to undermine real export growth and fixed investment, helping to underpin our view for structurally slower growth over the next several years.

  • We also anticipate a slowdown in real private consumption growth as consumers are hit hard by high inflation, rising interest rates and a significant sell-off in the exchange rate.

  • Hydrocarbon sector weakness will also weigh on Colombia's balance of payments position. Faltering oil prices and production will temper investment into Colombia and cool export growth.

  • Meanwhile, slower oil production growth combined with increasing pressure to spend on social programmes will feed through to fiscal slippage in the years ahead. While the country is well positioned to withstand the storm, with a relatively low external debt burden and a sizeable stock of foreign reserves, the potential for deterioration in the country's macroeconomic buffers will temper investor perceptions of Colombia's sovereign creditworthiness.

  • The government and Fuerzas Armadas Revolucionarias de Colombia will reach a peace accord, likely in H116. However, given the splintered nature of the left-wing insurgent group, such a deal will only slowly improve the security environment.

Major Forecast Changes:

  • Given still accelerating headline price growth, we have revised up our 2016 average inflation forecast to 6.9%, from 5.8% previously. We maintain our end-2016 policy rate forecast at 6.50%, but now expect the bank to enact another 50 basis points of rate increases to 7.00% in the next few months, before easing monetary policy in the latter part of the year.

Key Risks:

  • A failure to continue improving its business environment could prolong Colombia's growth slowdown, as investors look to more favourable destinations for investment in light of the country's high wage and non-wage costs and insufficient infrastructure. We believe this will be headwind to growth in the medium term, but it could become a more structural, long-term issue if not addressed in the next few years.

Macroeconomic Forecasts (Colombia 2014-2017)
2014 2015e 2016f 2017f
e/f = BMI estimate/forecast; Source: National Sources/BMI
Nominal GDP, USDbn 378.3 291.7 280.7 323.0
Real GDP growth, % y-o-y 4.4 3.1 2.4 2.8
Consumer price inflation, % y-o-y, eop 3.7 6.8 4.6 3.5
Exchange rate COP/USD, eop 2,376.51 3,174.50 2,900.00 2,850.00
Budget balance, % of GDP -2.6 -3.2 -3.8 -3.6
Current account balance, % of GDP -5.2 -6.5 -6.0 -5.6
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Growth To Remain Subdued As Economy Struggles To Rebalance
8
GDP By Expenditure Outlook
9
TABLE: PRIVATE CONSUMPTION FORECASTS
10
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
Fiscal And Public Debt Outlook
11
Pullback In Spending Will Undermine Long-Term Growth Outlook
11
TABLE: FIXED INVESTMENT FORECASTS
11
TABLE: NET EXPORTS FORECASTS
11
Structural Fiscal Position
13
External Trade And Investment Outlook
15
Worst Is Past For Current Account, But Little Silver Lining
15
Outlook On External Position
17
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
17
Monetary Policy
18
Above-Target Inflation Will Keep Policy Rate On The Rise
18
TABLE: TOP 5 GOODS EXPORTS
18
TABLE: TOP 5 GOODS IMPORTS
18
Monetary Policy Framework
20
Currency Forecast
21
COP: Low Oil Prices Will Ensure Further Depreciation
21
TABLE: BMI CURRENCY FORECAST
21
Chapter 2: 10-Year Forecast
23
The Colombian Economy To 2025
23
Structurally Weaker Growth Following Oil Bust
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 3: Political Outlook
27
SWOT Analysis
27
BMI Political Risk Index
27
Domestic Politics
28
Agreement On Reparations Lends Peace Talks Additional Momentum
28
TABLE: POLITICAL OVERVIEW
28
Long-Term Political Outlook
29
Many Structural Challenges Ahead
29
Chapter 4: Operational Risk
31
SWOT Analysis
31
Operational Risk Index
31
Operational Risk
32
TABLE: OPERATIONAL RISK
32
Trade Procedures And Governance
33
TABLE: LATIN AMERICA - TRADE PROCEDURES AND GOVERNANCE RISK
33
TABLE: LATIN AMERICA - TRADE PROCEDURES AND GOVERNANCE RISK (CONTINUED)
34
TABLE: IMPORT AND EXPORT DOCUMENTS
34
TABLE: TRADE PROCEDURES BREAKDOWN
34
Vulnerability To Crime
35
Chapter 5: BMI Global Macro Outlook
39
Global Macro Outlook
39
Unfinished Business In 2016
39
TABLE: GLOBAL ASSUMPTIONS
39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
41
TABLE: COLOMBIA - MACROECONOMIC DATA & FORECASTS
43

Assess your risk exposure in Colombia with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Colombia with confidence.

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