Colombia | An economy that spends, but only half-invests

Summary

Colombia’s GDP grew 2.7% in Q1 2025, driven by consumption (76.7% of GDP), while investment remains weak, especially in housing and infrastructure. The key challenge is boosting investment to ensure sustainable growth.

Key points

• Key points:
• Colombia posted its strongest economic growth since 2022 with a 2.7% expansion in Q1 2025. However, this surge is mainly powered by private consumption, now at a record 76.7% of GDP, raising concerns about its long-term viability.
• Consumption was boosted by lower interest rates, better wages, and job growth, although much of it informal. This spending resilience contrasts with weak fixed investment, which grew only 1.8%, signaling vulnerability in the productive base.
• Only investment in machinery and equipment showed strength, while housing and infrastructure spending fell sharply. These trends reflect structural hurdles such as poor public investment execution and tight fiscal space.
• Sectoral data confirms the imbalance: agriculture, services, and light industry are recovering, but capital-intensive sectors like construction and mining remain stagnant. This hinders the overall impact of investment on growth.
• Colombia cannot continue relying solely on consumption; it must step up its investment efforts to secure lasting and balanced growth.

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