Why Colombia Is a Top Foreign Investment Destination For 2024

Economic Growth

Colombia’s economic growth over past decades has been truly extraordinary. Although the country’s GDP took a commensurate dip during the pandemic, it posted strong recovery numbers after. Growth reached 7.5% in 2022, and although it is forecasted to level off in 2024, the country has withstood the shock of the pandemic extremely well overall.

Nowhere is this more obvious than in FDI (Foreign Direct Investment) inflows, which grew over 50% between 2021 and 2022. Numerous sectors benefited from this large-scale injection of capital into the country, including manufacturing, logistics, communications, finance, and agriculture. 

This increase isn’t a coincidence - it’s the result of responsible policy decisions. The World Bank notes that “Colombia has a track record of prudent macroeconomic and fiscal management, anchored on an inflation targeting regime, a flexible exchange rate, and an upgraded rule-based fiscal framework, which provide a good foundation to secure macroeconomic stability…”

In the agriculture sector specifically, major M&A deals made waves in 2023, especially the acquisition of Nutresa, Colombia’s largest food business, by billionaire Jaime Gilisnki. Backed by funds from the Saudi royal family, the Nutresa deal has already had a ripple effect on Colombia’s agriculture supply chain, and has laid a path for more capital injections into the country. 

U.S. retailers are also looking to Colombia to hedge against production shortages for key crops in other regions. In the lime category, seasonal shortages in Mexico and supply chain disruptions at the border have led retail giants like Walmart to expand their procurement efforts in Colombia, and this trend will likely be observed in other product categories over time.

As the geoeconomic focus of the United States turns away from China and towards its regional allies in Latin America, Colombia will find itself in a much more prominent position. Look for this upward trajectory to continue in 2024. 

Political Stability

When most people think of Colombia, they often think of the Colombia of 40 years ago - violent, unstable, and not an ideal location for foreign investment. 

What they don’t realize is how much things have changed. The perception of Colombia has shifted a full 180 degrees, and the country is now a top tourist destination and hub for expats and retirees. 

Why? Well, a major factor has been the establishment of total political stability and the rule of law. 

Nowhere is this more obvious than in the recent election of Gustavo Petro. Though his victory was a surprise (and also represented a dramatic shift in power from the center-conservative administration of his predecessor, Ivan Duque), the ascension of Petro was notable in that there was little disruption to supply chains, few protests, and no impediment to the functioning of state institutions. 

The peaceful transition of power from one political party to another isn’t such a sure thing these days, even in the developed world.  

Needless to say, not everyone is happy with Petro or his left-leaning agenda. But, encouragingly, the system of checks and balances maintained by the Colombian constitution seems to be working remarkably well; the president has had to compromise, modify, and discard policies that weren’t amenable to the legislature or the courts. The investment-friendly policies that have come to define Colombia in recent years have been maintained, and the government is placing greater emphasis on sustainability and the productivity of the economy.  

Although he’s far from popular, Petro is proof that the political stability of Colombia has improved tremendously. Far from the intense political divisions in other parts of the world, politics in Colombia have become relatively centrist: while the opposing political parties still have drastically different ideas about how the country should be run, most agree on where it ought to be going: forward. This consensus underpins the economic growth of the country.

Natural Resources

During a time when climate change is disrupting economic activity all over the world, the presence of natural resources is gaining increased importance. Serious questions are being asked about how agricultural production will adapt to the challenges of a changing climate, and it’s clear that certain regions will lose productive capacity while others will need to increase production to compensate. 

Colombia has the potential to become a global agricultural powerhouse. With vast reserves of arable land, an ideal climate for growing a wide variety of crops, and privileged logistical access to both Pacific and Atlantic sea lanes, Colombia is a country whose potential as a food producer is only just beginning to be understood.

Not only that, but Colombia is one of the top countries in terms of a resource that scientists agree will become increasingly scarce in the future: water. The availability of fresh water is an issue that defines the agriculture industry, and changing weather patterns will only enhance this. 

As the number two country on Earth for annual precipitation, it’s clear that Colombia is well-positioned to withstand the disruptions in climate patterns that other regions are grappling with. There are certainly factors that could affect Colombia, but drought is not likely to be one of them.

Colombia’s fertile soils will also become increasingly valuable as nutrient depletion accelerates in other parts of the world. The volcanic soils of the Andes region are ideal for their high nutritional content, especially nitrogen, phosphorus, and potassium. This, combined with ample rainfall and plentiful sunlight, make for excellent growing conditions across the country. 

Of course, Colombia possesses natural resources beyond weather and soil - the country is also a major exporter of petroleum products, minerals, and other commodities. Although the current government is attempting to reduce the focus on fossil fuels in the exports sector, the presence of these resources will bolster the Colombian economy going forward. 

In an era of highly speculative markets, dubious asset values, and increasingly shaky currency metrics, the presence of natural resources will define economic success for many countries. In Colombia, these resources are abundant, and with the right investment strategy, owners could be greatly rewarded over time. 

Conclusion

There's never been a better time to take your portfolio international, and Colombia is without a doubt one of the best places to do it. With abundant natural resources, a much-improved political landscape, and dynamic growth across the entire economy, Colombia is one of the leading emerging markets on Earth. To learn more about how you can access prime farmland assets in this incredible country, get in touch with out team.