A FOUR-FRONTAL ATTACK

Colombia 2017 | ECONOMY | INTERVIEW

TBY talks to Ricardo Ávila, Editor-in-Chief of Portafolio, on the biggest social, political, and structural changes Colombia must make to reap a full peace dividend, maximizing its huge agricultural potential, and the cornucopia of sustainable energy possibilities.

Ricardo Ávila
BIOGRAPHY
Ricardo Ávila is both the Editor-in-Chief of Portafolio, Colombia’s largest and most influential business daily, as well as Deputy Editor-in-Chief of El Tiempo, the most important newspaper in the country. An economist by training, he holds a master’s from the University of Pittsburgh, as well as a graduate certificate in Latin American Development. Previously he was Editor-in-Chief of Cambio, another leading weekly. A winner of the National Prize of Journalism, he was a lecturer of Econometrics and Economic Journalism at the Universidad Javeriana in Bogotá. He has been a consultant for the Andean Development Corporation in Caracas, the Organization of American States, and the Inter-American Development Bank in Washington, DC.

What are some important stories in Colombia not being covered by the international media?

The biggest challenge is the need to get away from daily business and focus more on long-term trends. It thus becomes absolutely clear that Colombia is a success story. The people who have recognized this have decided to invest in the country. FDI grew in 2016, much the opposite to what it did in the rest of Latin America that year. The message is that bringing money into this country is worth the risk.

Why is Colombia attracting greater foreign investment than its neighbors?

Two reasons: first, the size of the internal market and an increase in domestic consumption levels. The proportion of poor people is half of what it used to be at the beginning of the century, and the size of the middle class has doubled. This creates a virtuous circle in the sense that there is more consumption, more investment, and better sales for companies focused on the local market. Consumption is not growing as strongly as in the boom years; however, Colombia is still an interesting place to be. At the same time, it is also clear that Colombia has advantages because of its geographical location as the crossroads of Latin America.

What are some of the challenges the economy needs to address?

Beginning with institutions, Colombia still has a problem with crime both in the countryside and in urban areas. There are doubts about the efficiency of the justice sector and the quality of police services, not to mention a lack of trust in politicians due to high perceptions of corruption. We also have to complete our investments in physical infrastructure; Colombia still has some of the worst roads in Latin America. There is a plan in place to fix it, but it needs to actually be completed. We also need rail services and to make use of the Magdalena River as an artery for transporting goods. Regarding education, we still have quality issues and rank low in the PISA tests given by the OECD. Attendance rates among young children are still lower than in most of Latin America. We also need to improve the legal framework and efficiency of settling disputes. We have to invest more in R&D. The biggest opportunity we have is to develop our agriculture. We are one of the richest countries in the world in terms of arable land and water resources. It is absolutely mind-boggling that we are not an international power in terms of producing food. If Colombia were able to devote more than seven of its 25 million ha to agriculture, the country would be a different place.

What sectors of the economy have been overlooked by foreign investors?

Given our geography, the renewable energy sector has many possibilities. The north could develop important wind farms, while the center and east have the sunshine needed to intensively produce solar energy. Taken together, we could become a net exporter of energy to Central America, which already needs more electricity.

What is your long-term assessment of the peace agreement for the economy?

It will not be immediate and will have to be earned: this is the biggest challenge. We have to not only take care of the victims and make the right decisions for integrating the guerillas into society, but also—and especially—develop the countryside.

What is your outlook for 2017?

The economy should perform a little bit better, though not dramatically so. We could see an upside in terms of oil prices, and tourism revenues might increase if the infrastructure agenda is developed according to plan. In the case of Bogotá, we are watching for infrastructural investments, especially roads and the metro system. If we stabilize the political situation and achieve peace, there is a good chance the economy could grow faster than its current rate of 2.5-3%.