Business Monitor International


Colombia Business Forecast Report

Published 20 October 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Colombia Business Forecast Report

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 region, our increasingly cautious view toward the country's oil sector will feed through to the economy in a number of ways:

  • We are now forecasting 4.6% average real GDP growth between 2014 and 2024, revised down slightly from our previous 4.7% forecast. This change reflects our expectation that net exports will become a growing burden on headline growth.

  • Moreover, whereas we had previously expected the government would stay the course in its fiscal consolidation efforts, we now forecast that the slower oil production growth combined with increasing pressure to spend on social programmes will feed through to modest fiscal slippage toward the latter half of our 10-year forecast period.

  • Finally, we have tempered our foreign reserve growth forecasts, noting that weaker oil production is likely to weigh on export growth and drive up the country's current account deficits.

While the country is well positioned to withstand the storm, with low external debt and a sizeable stock of foreign reserves, the potential for deterioration in the country's macroeconomic buffers will temper investor perception of Colombia's sovereign creditworthiness.

Key Risks To Outlook:

  • Upside Risks: Elevated foreign...

Table of Contents

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Risk Of Attacks To Remain Elevated During Peace Process
8
TABLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Many Structural Challenges Ahead
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Investment And Consumption To Drive Robust Growth
14
Table: GDP By Expenditure
14
Fiscal Policy
16
Moving Back Toward Fiscal Consolidation In 2015
16
Table: Fiscal Policy
16
Balance Of Payments
17
Oil Pipeline Attacks Tempering Goods Trade Growth
17
Table: Current Account
18
Monetary Policy
20
Hiking Cycle Nearing The End
20
table: Monetary Policy
20
Table: BMI Currency Forecast
21
Exchange Rate Policy
22
COP: Depreciatory Trajectory To Continue
22
Table: Exchange Rate
22
Banking Sector
24
Strong Growth Potential For Consumer Loans And Electronic Deposits
24
Table: Number of Users By Type Of Account
24
Chapter 3: 10-Year Forecast
27
The Colombian Economy To 2023
27
Sustainable And Sturdy Growth
27
table: Long-Term Macroeconomic Forecasts
27
Chapter 4: Business Environment
29
SWOT Analysis
29
BMI Business Environment Risk Ratings
29
Business Environment Outlook
30
Table: BMI Business And Operation Risk Ratings
30
Institutions
31
Table: BMI Legal Framework Rating
31
Table: Labour Force Quality
32
Infrastructure
33
TABLE: LATIN AMERICA - ANUAL FDI INFLOWS
33
Market Orientation
34
Table: Trade And Investment Ratings
34
Operational Risk
35
Chapter 5: Key Sectors
37
Pharmaceuticals & Healthcare
37
table: Phar mac eutica l Sales - Hist orica l Data And Forecasts
38
table: Healthcare Expenditure Trends - Historical Data And Forecasts
39
table: Government Healthcare Expenditure Trends - Historical Data And Forecasts
39
table: Private Healthcare Expenditure Trends - Hist orical Data And Forecasts
39
Telecommunications
40
table: Telecoms Sector - Mobile - Historical Data & Forecasts
41
Table: Telecoms Sector - Wireline - Historical Data & Forecasts
42
Other Key Sectors
45
table: Oil and Gas Sector Key Indicators
45
table: Defence and Security Sector Key Indicators
45
table: Infrastructure Sector Key Indicators
45
table: Food and Drink Sector Key Indicators
46
table: Autos Sector Key Indicators
46
ta ble: Freight Key Indicat ors
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Eurozone Downgrade On Poor Q214
47
Table: Global Assumptions
47
Table: Developed Stat es, Real GDP Growt H, %
48
Table: BMI VE RSUS BLOMBE RG CON SEN SUS REAL GDP GROWTH FORECASTS, %
48
Table: Emerg ing Mark ets , Real GDP Growth , %
49

The Colombia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Colombia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Colombia's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Colombia's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Colombia's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Colombia, including currency volatility, the commodity price boom and protectionist policies.

The Colombia Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Colombia economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Colombia through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Colombia Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Colombia and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Colombia, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Colombia over the next 5-years?

BMI's Colombia country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Colombia Market - Political Strengths, Weaknesses, Opportunities and Threats facing Colombia.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Colombia's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Colombia's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Colombia, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Colombia's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Colombia will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Colombia's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express