Colombia | Final Consumption Drives GDP, but Investment Remains Uneven

Summary

GDP rose 2.1% y/y in Q2 2025, fueled by consumption, especially durable goods. Investment focused on machinery and civil works, but buildings weighed down growth. The 2025 forecast remains at 2.3%, with room for upside if positive trends strengthen.

Key points

• Key points:
• Final domestic demand grew 4.2% y/y in Q2 2025, driven by strong appetite for durable and semi-durable goods, supported by higher real wages, job creation, and steady remittance inflows—factors that strengthened household purchasing power.
• Fixed investment rose 1.7%, concentrated in machinery and equipment, while housing and other buildings continued to decline. The investment rate held at 17.2% of GDP, well below the average of the previous decade, underscoring the need to expand and diversify investment to sustain more balanced growth.
• Robust domestic demand pushed imports up 9.7%, especially in goods, while exports fell 1.6%. Despite the drop, external sales so far show no significant impact from U.S. tariffs on certain products.
• On the supply side, trade, transport, and consumption-related services led growth, in contrast with mining and construction, which remain weak. This divergence reduces the uniformity of economic expansion and limits the spillover effect to other sectors.
• For 2025, GDP growth is projected at 2.3%, with upside potential if confidence strengthens, public spending remains high, and non-traditional exports maintain their resilience. The challenge is to turn these cyclical drivers into broader, more sustainable growth.

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