Did you know that Colombia’s economy presents very favorable opportunities for those who want to invest abroad? Today, it is considered one of the most important economies in Latin America, with increasing stability even after a very complicated financial year due to the COVID-19 pandemic.
The Latam market is promising as a whole, and this positive trend is also revealed in Colombia in relation to the future, with the local government working hard to make it interesting for the international public. It is no wonder that companies such as iFood and Localiza have established themselves very well in the region.
In other words, the doors are open for those who wish to invest and launch businesses in Colombia. Learn more about it below and get ready to grow your company!
What are the main indicators of the economy in Colombia?
To understand the scenario of the Colombian economy, it is necessary to analyze some important indicators. In addition to contextualizing the current market in the country, they help forecasting long-term investments. Let’s check it out!
During the period of the pandemic, Colombia’s GDP, the fourth-largest economy in Latin America, deflated by 15.7% in the second half of 2020. This was due to the lock downs that prevented the spread of coronavirus.
However, the forecast for 2022 is for growth of 6.8% in the same period, compared to those difficult months. For the whole year, the country’s GDP is expected to increase by at least 7.5%. This improvement is due to projects for the road network, Bogotá metro and implementation of the 4G network.
The country, like the rest of the world, has been hit hard by the pandemic caused by COVID-19. However, the government acted quickly on measures to protect life, livelihood, jobs and businesses.
Economic activity has been recovering rapidly and in June 2021 it reached almost the same level as the end of 2019, despite a temporary slowdown due to restrictions. On the other hand, the growth of poverty is still visible: 2.8 million people still live in extreme situations in the country.
The Colombian government invests heavily in the development model developed by the National Strategy for Circular Economy (Estrategia Nacional de Economía Circular – ENEC). This proposal aims to transform production and consumption chains, by closing material, water and energy cycles, into new business models.
The country is a pioneer in Latin America with this strategy. Furthermore, it is based on the concept of circular economy and the 9 Rs: Rethink, Reuse, Repair, Restore, Re-manufacture, Reduce, Re-purpose, Recycle and Recover.
Why invest in Colombia?
Latin America has exemplary countries when it comes to digital transformation. The Mexican market, for example, invested heavily in e-commerce payment methods and is now among the countries that grew the fastest in this segment.
In Colombia, this evolution has not been different precisely because of the investment directed to technology. The country works with a number of investment initiatives and encourages the growth of startups, in addition to working with 38 investment funds and various government investment programs.
The country’s technological centers also attract attention, and are located in the cities of Bogotá and Medellín. To top it off, it’s a very well-connected country:
- they have 16 international trade agreements;
- more than 60 partner countries;
- among the current double taxation agreements, Switzerland, Canada, Mexico, and Spain are included.
In addition, there is preferential access to markets that add up to one and a half billion consumers, which include the United States and the European Union. The trends for payments in Latam provide a good insight into how to drive sales to various parts of the world and improve the consumer experience.
What are the challenges of the Colombian market?
Colombia has a history of prudent macroeconomic and fiscal management, anchored in a regime that sets targets for inflation, a flexible exchange rate and a rules-based fiscal framework, which has allowed the economy to grow uninterruptedly since 2000 and provided political space to respond to the crisis caused by COVID-19 in a positive way.
However, some challenges are still present in the Colombian economy, and it is important to study them before taking your business to the country. The country has seen tax increases for companies, even with the withdrawal of tax reform by President Ivan Duque.
It is also worth emphasizing that there will always be some cultural barriers that need to be broken. In the 1920s, Ford did not take these variables into account and did not do well. Therefore, doing an in-depth study to outline the best market penetration strategy is essential to have the expected success.
How to plan my business expansion?
After all this information, are you interested in being part of Colombia’s economy and expanding your business? Here is a little guide on how to do it successfully.
Run a business analysis
A business analysis consists of a series of studies and actions that help to observe the reality in which the organization finds itself. The Brazilian market is different from the Colombian market, so it is important to invest in this initiative so as not to act in the dark and deal with consequences that affect your profitability.
Each and every decision-making process must be data-driven, regardless of its size and complexity: from a post on a social network, to the opening of a branch in Colombia.
The use of data can benefit any company, process and operation, the cost is low and its sources are very accessible. There are hundreds of reports on the internet and software that take care of capturing data, in addition to professionals qualified to collect and interpret these numbers.
The process is also essential for anyone looking to adopt new digital payment methods, an essential alternative for any business that wants to grow.
Count on expert partners
Even if you know a lot about the Colombian market, it is impossible to enter this context without support. Therefore, look for expert partners that can support your expansion efforts, from understanding how the payment landscape is like to navigating regulations and consumer habits.
So, could you visualize and understand what Colombia’s economy is like and the opportunities it offers? With strategic information like this, you will have a sustainable and successful expansion.
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