Colombia | Consumption Drives Colombia

Summary

Private consumption has become Colombia’s key growth engine. Driven by employment, income, credit, and remittances, it is shifting toward services and entertainment, while demographic changes reshape household spending patterns for the years ahead.

Key points

• Key points:
• The report highlights that domestic demand has consistently outpaced GDP, with household spending at the center of recent growth. Final consumption now accounts for its highest share of the economy, largely due to the expansion of private services.
• One of the most notable findings is the structural shift in spending patterns. Recreation and entertainment —particularly gambling— have gained weight, gradually reducing the share of food, clothing, and housing. These shifts reflect changing household preferences in the post-pandemic context.
• Key drivers sustain this trend: low unemployment, rising formal and informal employment, recovering real wages, falling poverty, and a surge in remittances. Remittances alone represent nearly 4% of households’ disposable income, adding an important external source to fuel consumption.
• Consumer credit has accelerated as lower delinquency rates and favorable financial conditions enhanced households’ borrowing capacity. At the same time, debt burdens have eased relative to income, allowing families to maintain or increase spending momentum.
• Looking ahead, the report stresses the importance of demographics. A faster-than-expected transition toward an older population and declining child cohorts will reshape household consumption habits, demanding adjustments from businesses and policymakers alike.

Geographies

Topics

Tags