ONE OF THESE DAYS

Colombia 2014 | DIPLOMACY | YEAR IN REVIEW

Crude oil production was intensified to over 1 million bopd in 2013, though unstable prices on the global market reinforced the need for a diversified economy and a reduced reliance on the country's massive resource reserves.

Colombia is a unique, storied nation on the verge of transformation. Predictions for an end to the longest running internal armed conflict in the Western Hemisphere, between the Colombian state and the Revolutionary Armed Forces of Colombia (FARC), and the signing of numerous free trade agreements (FTAs) promises an affluent future for the country. Its international reputation is improving with each passing day. A strong performance in the 2014 Brazil World Cup increased visibility in the international arena, and the country is progressively becoming a magnet for migrants across the region, drawn to its budding economy, the third largest in Latin America.

Colombia's population is approximately 48 million, with a 21.5 million strong labor pool and an unemployment rate of 9.2%. Ethnically diverse, its citizens speak an impressive variety of languages, with over 80 tongues in use today. Spanish dominates across the nation, however, and Colombia is known for its neutral and relatively easily comprehensible dialect compared with other Latin American nations. English is on the rise among the younger generation. Despite challenges in infrastructure and in sectors as varied as health and agriculture, its educated population is making the most of what is available, excelling in the development of the IT sector and innovating in other areas. Many more are employed in tourism and hospitality, which, in tandem with the real estate market, is booming on the back of foreign investment, particularly along the northern Caribbean coast. Spanish investors eager to escape a dulled economy in Europe are immigrating to Colombia, bringing financing and expertise, while large numbers of Venezuelans are also finding their fortune there.

The Colombian economy grew by 4.3% in 2013, and a remarkable 6.4% in 1Q2014. Inflation was at a record low of 1.94% in 2013, and is expected to remain low throughout 2014. The Central Bank raised the lending rate for four consecutive months in mid-2014 in a bid to take advantage of the expanding economy. Positive ratings from international monitoring organizations Moody's, S&P, and Fitch show just how far the country has come over the past decade, while foreign direct investment rose to $16.8 billion in 2013, representing 4.4% of GDP.

The consistent growth being experienced by the country is largely the result of the policies of the Social Party of National Unity under Álvaro Uribe until 2010, and currently under the direction of President Santos, which have actively fostered a free trade model and reduced obstacles for foreign investors. This has led to the signing of numerous FTAs, the most significant of which arguably being the 2012 US-Colombia FTA. The process of completing FTAs with other nations was intensified in 2013, with progress being made on agreements with the EU, South Korea, Japan, and Panama, among others. To deal with the expected rise in exports, Colombia's port infrastructure is being expanded, and an interesting project on the Magdalena River has been started in earnest. This will involve dredging and deepening parts of the waterway, which runs from the Andes through the interior of the country to its Caribbean coast, to allow the transportation and export of numerous products that were previously carried to port by road. Other government initiatives with a direct effect on trade include the setting of a new exchange rate with Venezuela to curb smuggling, and the strengthening of border security with Panama and Ecuador.

Specific sectors experienced robust growth over the year, with agriculture booming on the back of favorable climatic conditions. Crude oil production was intensified to over 1 million bbl/d, though unstable prices on the global market reinforced the need for a diversified economy and a reduced reliance on the country's massive resource reserves. The construction sector grew impressively, with high-end properties becoming more common in regional cities, the capital, and the coast, and the government funding the construction of thousands of homes to narrow the considerable housing deficit. The financial sector, long a key contributor to GDP, continued to grow, and insurance companies are benefiting increasingly from non-life policies for SMEs and businesses. The insurance sector was liberalized in 2013, creating a more competitive dynamic among rival firms. Debate raged throughout the year on the government's proposed healthcare reform, which will potentially have lasting effects on the insurance world and, of course, on the well-being of Colombian citizens.

The whirlwind of activity inside and out of Colombia in 2013 bodes well for the short term. The shrewd economic policies of the incumbent regime, coupled with the unpredictable but encouraging peace negotiations between the government and non-state actors, will decide the future of the country. If the congressional opposition can be reconciled, political stability maintained, and a higher level of security throughout the remoter reaches of the country established, Santos' administration will have time to concentrate on building a Colombia that encourages creativity and social prosperity, and can face the world with a new, positive face.