After years of conflict with rebel groups, Colombia’s government has made progress toward peace and is aiming to maximize related economic gains. Colombia’s economy is the third largest in Latin America, but its performance has lagged recently. Oxford Economics lowered its growth forecast for 2015 to 3%, citing the effect of low commodity prices on the value of exports. Oil is the country’s most important export, but Colombia also supplies coal, precious stones, coffee and tea to markets worldwide.
Business travel industry insight
With close to 4 million visitors in 2014, Colombia’s travel market is similar in size to those of Chile and Peru. But all three are dwarfed by Brazil and Argentina, which attract twice as many travelers. Anemic growth in global markets is expected to slow business travel spending in Colombia. Average annual growth will fall below 5% during the next five years, according to Oxford Economics. That compares to an average annual growth of 12% for business travel spending between 2000 and 2014.
International hotel chains are extending their reach to secondary cities, including Cali, Cartagena and Medellin. But most hotel inventory is concentrated in capital city Bogota. Some hoteliers, like InterContinental Hotels Group, have opened properties in lesser-known cities like Cucuta and Yopal.
Bogota is at the heart of Colombian air travel, accounting for close to half the market. Flag carrier Avianca offers flights to more than 50 destinations, including 23 Colombian cities and towns. Airlines link Bogota with 10 U.S cities—most available via daily service—and offer transatlantic flights to Paris, Frankfurt, Barcelona, Madrid and London.
- A government plan called PIPE 2.0 is designed to encourage investment in the country’s manufacturing, mining and energy sectors.
- A 2012 free-trade agreement with the U.S., Colombia’s leading trading partner, is eliminating tariffs and contributing to an expansion of business between the two countries.
- Colombia has improved relations with neighbors Ecuador and Venezuela, giving a boost to regional trade. Companies engaged in cross-border travel and sales should find it easier to do business.
- Lower oil prices, weaker domestic growth and general investor caution all erode Colombia’s prospects for economic expansion.
- As an emerging market, the country keenly feels the effects of global economic changes. For example, if the U.S. Federal Reserve decides to increase interest rates, this may encourage investors to withdraw capital from Colombia and similar markets.
- Despite significant progress, peace negotiations with rebel groups have recently stalled and some violence has erupted in Bogota and elsewhere.
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