The conflict in Colombia has been raging for more than half a century, hindering any prospects of fully fledged economic development in the country. Despite the drag from the conflict, Colombia has managed to economically outgrow many of its neighbors, and create a middle class that proportionally to the country’s population, is second to none in South America. Now, the peace agreement may have unlocked the final piece of the puzzle that can well catapult Colombia to regional economic leadership.
Reports on ‘El Espectador’ one of Colombia’s main news outlets, support this argument. According to a piece written by the national planning directorate of Colombia, Simon Gaviria, and published online by El Espectador, Colombia is poised to double or even triple FDI inflows after the peace treaty is implemented. The figures are staggering: yearly FDI Inflows could increase to $35 billion USD (from $12 billion now), doubling per capita GDP from $6,000 USD to $12,000 USD, while boosting exports to $65 billion USD and generating economic GDP growth of 5%.
Although it will take time for these changes to materialize, within a regional context these projected figures are nothing short of miraculous. Countries in Latin America in general and South America in particular, have been suffering from the commodity bust over the last 2 years. Coupled with a global economic slow-down, this region is wounded and struggling to find its path back to growth. Colombia might become one of the few bright spots if and when the peace treaty is implemented.
A referendum to approve the treaty signed between President Juan Manuel Santos and FARC leader ‘Timochenko’, will take place on October 2nd. Although the treaty is expected to be ratified, it has faced stiff opposition from a sizable and vociferous minority, led by former President and now Senator Alvaro Uribe Velez. If the results of the referendum are positive, Colombia may become one of the places where investors choose to go to in search of growth now that the outlook for world economy is grim.
