Colombia | Recharged Consumption: The Drivers Behind the Momentum

Summary

Household spending has emerged as Colombia’s main growth engine in 2025, driven by rising income, improving credit, strong remittances, and renewed consumer confidence. Despite early signs of labor market cooling, consumption remains the key economic driver.

Key points

• Key points:
• So far in 2025, household consumption has taken the lead in Colombia’s economic recovery, standing out amid ongoing weakness in sectors like manufacturing and construction. This strength is reflected in vibrant retail trade dynamics.
• Retail sales grew by 11% through May, with notable momentum in categories such as vehicles, electronics, and appliances. The services sector is also gaining ground, particularly in restaurants and hotels.
• Consumer sentiment plays a key role in this resurgence. Confidence returned to positive territory in June for the first time since mid-2022, alongside increased willingness to purchase durable goods, housing, and vehicles.
• Disposable income is recovering steadily, supported by a resilient labor market and strong remittance inflows—growing over 15% year-to-date. Easing inflation and a more accommodative monetary stance have also reignited consumer credit growth after nearly two years of decline.
• However, the report notes a potential cooling in the labor market, which could temper consumption ahead. Early signs of slowdown are visible in labor-intensive sectors such as housing construction, although household spending is still expected to outpace GDP growth.

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