Colombia has been closed to investors for decades, not only due to its once heavily regulated economy but mainly due to ongoing political instability and an unstable internal security environment. It is a country that for many still has a reputation of violence and is associated with being one of the world’s most dangerous countries with high rates of kidnapping, terrorism and narco-trafficking, as well as Latin America’s longest running insurgency. Yet despite this it is fast turning into an investment hotspot.

In my opinion it is now the hidden investment gem of South America, with the country opening up to tourism, foreign investment and experiencing enviable rates of economic growth. All of which can be attributed to a government that is focused on stabilizing the internal security situation, reforming the economy, creating optimal conditions for economic growth and encouraging foreign direct investment (‘FDI’). This has seen the economy grow at a staggering rate over the last 10 years, except during the peak of the global financial crisis (‘GFC’), the increased growth of an entrepreneurial and educated middle class, growing domestic consumption, the substantial expansion of the local business sector and the solid growth of the local bourse, the Bolsa de Valores de Colombia (‘BVC’). In my opinion this can only continue and create further solid opportunities for investors.

Colombia has been experiencing solid economic growth since the early 2000s, in fact the Colombian economy has had GDP growth of over 4% annually since 2003, except during the peak of the global financial crisis in 2008 and 2009. For 2011 the International Monetary Fund (‘IMF’) forecast GDP growth of 4.9%, but in a recent report from Jos Daro Uribe the governor of Colombia’s central bank, the Banco de la Republica Colombia. GDP growth was reported as being between 5.6% to 6% in 2011. Furthermore in 2011, the Colombian economy saw its greatest quarter of GDP growth since 1979, with third quarter GDP growth of 1.7%. which equates to an annualized rate of 7.7%.

For 2012 the IMF has forecast Colombia’s 2012 GDP growth rate to be 4.5%, which is more than quadruple the IMF’s GDP growth forecast for the eurozone of 1.1% and three times the forecast rate for the U.S of 1.8%. Colombia also has the fifth highest 2012 GDP forecast for South America, behind Peru’s 5.6%, Paraguay’s 5%, Chile’s 4.7% and Argentina’s 4.6%, as the table below shows.

Table 1: 2012 GDP Forecasts