Our comprehensive assessment of Colombia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Colombia, as well as the latest industry developments that could impact Colombia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Colombia before your competitors.

Country Risk

Colombia Country Risk

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Core Views:

  • We believe that Colombia's economy will expand at robust growth rates in the coming years, benefitting from strong private consumption and rising gross fixed capital formation (GFCF). That said, with the oil sector set for slower growth, this will prompt larger net exports deficits, such that we anticipate slightly slower growth over the next decade than in the last.

  • The infrastructure, telecommunications and power sectors are particularly well positioned for growth.

  • After President Juan Manuel Santos won re-election in May, we anticipate broad policy continuity throughout the next administration.

Major Forecast Changes:

We have tempered our optimism on Colombia's long-term growth outlook. While the country remains one of our favourites in the...

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Colombia Operational Risk Coverage (9)

Colombia Operational Risk

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BMI View: Colombia's relatively large population, low bureaucratic hurdles to setting up a business, and developed financial markets increase the attractiveness of the country as an investment destination. However, an inflexible and costly labo u r market, high levels of crime in urban areas, and terrorism threats to extractive industrie s in rural parts of the country pose significant operational risks.

Overall, while Colombia is a relatively attractive investment destination, we highlight several risk factors that result in a score 47 out of 100 in the BMI Operational Risk Index. Despite significant improvements in recent years, a poor security environment remains Colombia's largest operational risk. Terrorism attacks by left-wing insurgent groups, poses threats to businesses...

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Colombia Crime & Security

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Despite significant improvements in the last decade, Colombia still presents considerable security risks for foreign business travellers, expatriate workers, and tourists in comparison with other Latin American countries. There are significant differences between the main cities and the more isolated rural areas, both in terms of the type and intensity of security risks. Crime is comparatively high in the main cities, while terrorist attacks are more targeted towards critical infrastructure such as oil pipelines. Colombia receives a score of 36.3 in the BMI Crime And Security Risk Index, placing 16th out of 28 Latin American countries in the regional comparison, next to Suriname and El Salvador.

As such, those in greatest danger of being victims of kidnapping and extortion are contractors and employees of companies in the extractive industry, particularly in the oil and gas sector. In the main cities, Colombia's weak...

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Colombia Labour Market

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BMI View: Colombia's Labour Market Risk score is bolstered by high levels of tertiary education and the competitive skill set of the labour force. However, high costs of employment and powerful labour unions, which have driven significant labour strikes in recent years, weigh on Colombia's overall Labour Market Risk score. We give Colombia a total Labour Market Risk rating of 50 .0 out of 100 in the BMI Operational Risk Index. This ranks the country 13th in the region, in between Panama and Costa Rica.

Colombia's Availability Of Labour risks are on par with the regional average. The risk score is boosted by steady urbanisation, which has seen the labour force gradually move into metropolitan areas, though high levels of inequality remain a major problem, with female wages...

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Colombia Logistics

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Colombia, boasting Latin America's fourth largest economy and the region's third largest population, will continue to attract investors. The country's most developed industries of oil and gas and mining offer well developed supply chains, but the overall transport network quality, relatively high utilities and trade costs will be key entrance risks for new sector investment. The country's investor opportunities ensure an above average score of 54.4 out of 100 in the BMI Logistics Risk Index, but risks to supply chains mean that the country is placed just ninth in a regional comparison of 28 Latin American and Caribbean states.

As the region's fourth largest economy Colombia offers a robust market size for investors, the relative reliability of its utilities infrastructure further supports investor growth, although in comparison with its regional peers companies face heightened utilities costs for this level of...

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Colombia Trade & Investment

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While Colombia boasts relatively high marks for low bureaucratic hurdles to setting up a business, and shows strong signs of continued banking sector growth, potentially benefiting international financial firms, we highlight that a number of fairly serious challenges remain that may prove problematic for investors. For one, trade and investment flows are relatively low by the standards of other large economies in the region. Additionally, corruption remains a serious problem, and the tax burden is fairly high. Overall, these factors leave Colombia in the middle of the pack in our Trade and Investment Market Risk Index, scoring 47.3 out of 100, a score that puts the Andean nation in 14th place out of 28 Latin American and Caribbean countries we rate, one position ahead of Brazil, and two spots below Mexico. The middle-of-the-pack rating reflects strengths in some areas, such as recent efforts to reduce red tape for businesses and financial market development, making...

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Colombia Industry Coverage (19)

Agribusiness

Colombia Agribusiness

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BMI View: Colombia's agricultural sector will face a number of challenges in the medium term. Key export crops - such as coffee and cocoa - have underperformed in recent years owing to a lack of investment in infrastructure and outbreaks of disease. Although regeneration work is under way, it will take time to bear fruit. The strength of the Colombian peso against the US dollar is also posing challenges for the agribusiness sector , as the competitiveness of Colombia's exports is being eroded. Finally, there is still unrest among dairy, livestock and grain producers who fear that the entry into force of the Colo mbia-EU free trade agreement will further erode their profitability. The Ministry of Agriculture has taken steps to support these sectors to adapt to the arrival of...

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Autos

Colombia Autos

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BMI forecasts vehicle sales in Colombia to decrease 3.2% in 2013, due to a 3.4% expected decline in the passenger car segment and a 2.9% drop in the CV segment.

In 2013, BMI forecasts a 13% drop in vehicle production on the back of a 15% decline in passenger car manufacturing and a 9.8% fall in CV output.

A number of international auto manufacturers currently produce vehicles in Colombia. General Motors (GM), based in Bogotá, has an annual capacity of about 100,000 units and assembles some GM Korea vehicles from complete knock-down (CKD) kits. Renault, based in Medellín, with an annual capacity of 80,000, assembles CKD kits bought from Turkey, France, Spain and Brazil. Mazda Motor, also based in Bogotá, with a capacity of 15,000 units annually, builds up the 2, 3 and...

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Commercial Banking

Colombia Commercial Banking

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Commercial Banking Sector Indicators 
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Consumer Electronics

Colombia Consumer Electronics

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BMI View: Prominent trends in the Colombian consumer electronics market, for instance booming smartphone and tablet volumes , will be supplemented by a boost to LCD TV sales due to the 2014 World Cup. Conditions are right for strong growth to continue beyond 2014, with a burgeoning middle class and private sector credit growth , which will stimulate household consumption , and as incomes rise an increasing share of spending will go on consumer devices. This will allow vendors to tap into the relatively low penetration rates in key device categories such as PCs, smartphones and flat-panel TVs. Additionally, the...

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Defence & Security

Colombia Defence & Security

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BMI View:   The Colombian government is involved in ongoing talks with left-wing insurgent group Fuerzas Armadas Revolucionarias de Colombia (FARC). At the same time, the peace talks are accompanied by sustained or open-ended ceasefires, as well as disruptions of the country's pipeline network, carried out by rebels, so the country is still dedicating large amounts of GDP to maintaining its significant armed forces. This trend is set to continue in the near term, with medium-term expenditure set to rise.

As one of the highest military spenders in the Latin American region, Colombia, BMI expects, will perform USD12.5bn of defence spending in 2014. For the remainder of the forecast period (2015-2018) we expect Colombia to spend an average of USD16bn annually on defence, with the defence budget reaching USD18.6bn by 2018.

We have given Colombia an...

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Food & Drink

Colombia Food & Drink

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BMI View:   I nvestor i nterest in Colombia has picked up in recent years, with key examples including the move by Portugal's leading food retailer, Jerónimo Martins, to target Co lombia ahead of other countries such as Argentina and Brazil. We forecast strong real private consumption growth in 2014 and 2015 as a two-year long household delever aging cycle comes to an end . W hile household spending growth has moderated since peaking in late 2011, we believe that improving labour dynamics, combined with record low interest rates, will drive a re-acceleration in private...

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Freight Transport

Colombia Freight Transport

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We forecast Colombian real GDP to expand by 4.1% in 2013 and 4.3% in 2014, up from 4.0% in 2012. However, ongoing labour disruptions to exports pose downside risks to our medium-term growth outlook, which also feeds into our forecasts for the country's freight industry. That said, we maintain a favourable long-term growth outlook, as investment into the infrastructure and oil and gas sectors, combined with a strengthening consumer, will drive robust real GDP growth in the coming years.

We forecast real government consumption growth to moderate from 5.1% in 2012 to 4.0% in 2013 and 3.0% in 2014, as the government remains committed to its fiscal consolidation drive. However, we are seeing increasing scope for the government to increase spending across several sectors that have had a relatively weak performance in recent months. Indeed, the agriculture sector was hard hit by a strong currency early in the year, which saw exports contract, and...

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Information Technology

Colombia Information Technology

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BMI View: T he outlook for the Colombian IT market is positive, with strong growth forecast s for the hardware, software and service sectors in 2014 - and over the medium term. We forecast total IT market spending will increase at a CAGR of 10.8% 2014-2018 to reach a value of COP1 0 .1trn in 2018. Strong economic performance, declining global device prices, a supportive policy environment and investments in telecoms networks and retail operations will all contribute to growth. Particular areas of opportunity include retail hardware sales, government procurement, smart infrastructure deployments and cloud computing. However there is downside as economic and political uncertainties could derail the Colombian economy from its strong growth trajectory.

...

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Infrastructure

Colombia Infrastructure

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BMI View:   We have upwardly revised our construction industry forecast for Colombia to 15% y-o-y real growth in 2014 and maintained a strong 9.6% for 2015. This is on the back of strong momentum in the transport infrastructure sector, particularly road projects . Our positive outlook for the country is supported by a maturing PPP framework, diverse sources of project finance , and an improving business environment .

Key T...

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Insurance

Colombia Insurance

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BMI View: Colombia's insurance sector is rightly seen as one of the most dynamic of any globally. 2014 will be seen as a year of consolidation in a long period of otherwise rapid growth. Foreign companies have been attracted to both the life and the non-life segments and will continue to arrive.

By many metrics, Colombia's insurance sector is still under-developed: non-life insurance premiums per capita and life insurance premiums per capita are, as of late 2014, each a little over USD100.  In each of the two main segments, the premiums represent about 1.3% of GDP. In part because of the softness of the COP relative to the USD, growth has slowed to pedestrian, single-digit rates. The latest report from Suramericana, the element of Grupo de Inversiones Suramericana (GRUPOSURA ) that is the largest insurance company overall,...

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Medical Devices

Colombia Medical Devices

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Espicom Industry View:   The Colombian m edical device market   has benefitted from the country's increasingly political stability and GDP growth above the Latin American average in recent years. It now ranks fourth in Latin America   and is projected to register the third fastest 2013-2018  CAGR in the region . Per capita medical device expenditure is low but h ealthcare and regulatory developments implemented over the last three years will provide new growth opportunities for medical device companies...

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Mining

Colombia Mining

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BMI View: We expect uneven mining sector growth through 2018 across various countries within Ce ntral America and the Caribbean. The region has significant untapped mineral potential, though variations among countries' business environments and operational challenges will mean varied performance . Overall, we expect Colombia and Panama to see the strongest mining sector growth, while Guatemala, and to a lesser extent Honduras, underperform.

We expect Colombia and Panama to lead the region in terms of mining sector development, with the Dominican Republic not far behind. The former two lead in their overall business environments and mining sector regulatory framework, which should enable consistent investment and sector development...

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Oil & Gas

Colombia Oil & Gas

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BMI View :  Colombia's energy sector is approaching an inflection point in the next several years. While the past decade  has witnessed strong production growth due to improvements in the business  and security environment, we caution that the country will experience downward pressure on production over the longer term. The tendency toward smaller finds, as well as recent increases in pipeline attacks have begun to show signs of decreased investor interest in Colombia's resources, as witnessed in the recent licensing auction. Given ongoing below and above-ground challenges, we maintain a cautious stance toward the future of Colombia's hydrocarbon productivity.  

Headline Forecasts (Colombia 2012-2018)
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Petrochemicals

Colombia Petrochemicals

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The Colombian government is currently in the middle of a refinery expansion programme, hoping to turn a small oil products import requirement into an equally small export flow. BMI's latest Colombia Petrochemicals Report suggests this expansion could open up opportunities for increasing naphtha feedstock availability for the downstream petrochemicals industry.

The Colombian petrochemicals industry saw a decline in rubber and plastics output in 2013. While there was a definite uptrend in chemicals going into H213, both plastics and rubber were expected to perform poorly for the whole of the year. The poor output performance of petrochemicals industries in 2013 came amid deteriorating market conditions. The decline was related to weakening household spending over the period with average retail sales growth.

In 2013, Colombia's petrochemicals facilities included capacities of 120,000tpa ethylene, 45...

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Pharmaceuticals & Healthcare

Colombia Pharmaceuticals & Healthcare

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BMI View:   President Juan Manuel Santos' re-election in June has given him a strong mandate to continue the process of healthcare reform in Colombia. Although the Santos administration has been successful in limit ing medicine price increases, financial problems will to plague the Colombian insurance system if structural issues are not addressed.

Headline Expenditure Projections

  • Pharmaceuticals: COP8,126bn (USD4.35bn) in 2013 to COP8,686bn (USD4.44bn) in 2014; +6.9% in local currency terms and +2.2% in US dollar terms. Forecasts revised down due to the strict implementation of drug price controls and the promotion of generic drugs.

  • Healthcare: COP49,956bn (...

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Power

Colombia Power

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BMI View:   The outlook for the Colombian energy sector is broadly positive, with demand for electricity steadily growing, and the government having recently taken several positive steps towards encouraging investment in the sector . Overshadowing this optimism are ongoing concerns about security. The distances between urban, electricity-consuming populations and sources of hydroelectric power are great, and the FARC considers many of these parts of the country to be under their control. Sabotage of power infrastructure projects is, unfortunately, commonplace.

Colombia's mining and energy planning unit has released an ambitious 2013-2027 electricity strategy aimed at boosting power sector capacity. The plan, which aligns with government efforts to encourage investment in the energy sector in order to meet growing demand for electricity, is a...

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Retail

Colombia Retail

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BMI View:   Colombia's retail sector forecasts show strong potential for growth, specifically at the end of the projection period during 201 7 -201 8 . BMI forecasts that total GDP will increase 45 % from US D397 bn in 2014 to US D 5 7 5bn in 2018, creating growth in the national economy and increasing net income levels. BMI forecasts that total spending in retail will grow more   than GDP and will increase by 46...

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Shipping

Colombia Shipping

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BMI forecasts growth across the board at Colombian ports in 2014. This will, in part, be due to base effects, as most facilities endured a downturn in volumes in 2013. Shipping sector growth over the medium term will be supported by growth in private consumption on the back of rising wages, and the opening of the expanded Panama Canal, which would see more, and larger, vessels calling at the country's ports. This possibility has piqued the interest of international container terminal operators, such as International Container Terminal Services Inc (ICTSI). Throughput volumes will also be supported by the growing dry bulk export story, in particular coal.

Headline Industry Data

  • The Port of Cartagena will see total tonnage volume increase by 6.9% to 20.69mn tonnes in 2014, and will average growth of 5.5% to 2018.

  • ...

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Telecommunications

Colombia Telecommunications

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BMI View:   Mergers and network investment are offering greater growth potential for wireline services and put innovations such as IPTV on the agenda for 2014. BMI believes that operators will increase their focus on data, network speed and content over 2014, seeing subscribers offered an increasing range of services and building revenue opportunities for operators. In the mobile sector, we remain concerned over increasing interference from the regulator. Nevertheless, BMI believes that Colombia will follow the emerging market trend of being a predominantly wireless communications market over the medium to long term...

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