LA VIDA

Colombia 2016 | ECONOMY | FOCUS: BOGOTÁ

At the heart of one of Latin America's most thriving economies shines Bogotá, a bustling center of urban social and economic development.

The capital city is the main engine of both a country and its economy. With a metropolitan area of around 10 million people, Bogotá represents nearly 25% of the Colombia's GDP and is among the top three Latin American cities for doing business according to the World Bank. The city's diversified economy sets it apart from other Colombian cities, which often depend excessively on one sector. Consequently, the GDP of the capital rose 3.5% in 2015, compared to the country's 3.2% overall growth. The city's Secretary of Economic Development, Freddy Montero, explained, “The capital was not hit as much as other regions in the country since we do not pump any oil."

The service sector is the largest contributor to the capital's economy and represents 61.6% of its GDP according to the Observatory of Economic Development of Bogotá. Commerce made up 15% of the city's income and manufacturing 8%. The construction industry, which has been one of the main drivers of the economy, decelerated and represented 5% of the city's GDP, as developers sought opportunities in elsewhere in the country where there was a growing demand and cheaper real estate. The financial sector represents around 11% of the capital's GDP and is to Bogotá what the oil industry is to Colombia. The main banks and insurance companies are based in the capital, which generates significant revenues for the city as well as a demand for highly skilled workers. Nevertheless, the city is taking steps to boost other sectors such as tourism, which in recent years has experienced significant growth. At the heart of Latin America, Bogotá's excellent location creates major opportunities for the MICE tourism segment. The capital received 1.1 million tourists in 2015, 30% of which attended business events. The District Institute of Tourism announced this year that it expects to receive 1.5 million international visitors by 2019, fueled mainly by business tourism.

In late 2015, the city elected Enrique Peñalosa as its new mayor. Peñalosa, who also served between 1998-2000, faces the challenge of developing the city's long-awaited metro system, which the city governments have been unable to construct since 1950. Fewer than one-in-five of the city's 8 million residents owns a car, which translates into scores of people using buses for their daily commute. The city currently has a bus rapid transit system, known as Transmilenio, which moves around 2 million people per day. The Transmilenio system was developed nearly 15 years ago during Peñalosa's first term, and the city debates whether to improve it or finally develop the metro.

Mayor Peñalosa envisions the metro to be mostly above ground, as construction will be quicker, cheaper, and easier, due to the engineering challenges posed by the city's moist soil. An underground rail in Bogotá is estimated to cost around $200 million per km to build, whereas the cost of an aboveground rail system would fall to $12 million per km, making a significant difference. Unlike former mayor Gustavo Petro, who planned to build a fully subterranean metro, Peñalosa opts for developing an underground subway only in the north and an elevated section in the southern part of the city. In April 2016, the local government created Metro de Bogotá, a public entity that will be in charge of the construction of the mass transportation system and the maintenance of trains. The mayor announced this year that the tender for the construction of the first line will take place in 1H2017, and analysts expect that this key transportation upgrade will also help reduce pollution.

Bogotá is the 27th most polluted city in Latin America according to a study carried out by the World Health Organization. The capital has a 440km bikeway to combat pollution, and mayor Peñalosa expects to add 200 additional kilometers before 2020. The metro and bikeways will significantly enhance the quality of the air and mobility, making Bogotá one of Latin America's best cities to live in and boosting its already thriving economy.