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Country Risk Report

Colombia

Last update – January 2026

Country rating 


MEDIUM RISK FOR ENTERPRISE
Economic risk

Moderate risk of payments disruption
Business environment risk
Moderate risk of payments disruption
Political risk

Slight risk of payments disruption
Commercial risk
Serious risk of payments disruption
Financing risk
Moderate risk of payments disruption
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Form of state
 Presidential republic
Head of state Gustavo Petro (President)
Next elections
 2026, presidential and legislative

Strengths & weaknesses

  • Latin America’s fourth-largest economy, with resilient domestic demand and strong labor market recovery 
  • Robust institutional framework and independent central bank support macroeconomic stability 
  • Expanding social safety nets and public spending have sustained consumer confidence, even amid high inflation
  • Security concerns, political violence and high informality continue to challenge the business environment 
  • Elevated fiscal deficits and rising public debt, with fiscal consolidation delayed by political uncertainty 
  • Persistent exposure to commodity price shocks and external volatility, especially in oil and mining 

Economic overview

Cyclical risks

Colombia’s economic recovery is gaining traction, with GDP growth projected at +2.8% in both 2026 and set to accelerate to +3.5% in 2027, outpacing several advanced economies. This momentum is driven by robust private consumption, a strengthening labor market and a gradual recovery in investment, particularly in infrastructure and construction. However, growth remains uneven across sectors, with mining and construction lagging behind services and manufacturing, and uncertainty looms over several industries due to rising geopolitical tensions in the area. Inflation, while declining, is expected to remain above the central bank’s 3% target through 2027, prompting a continued cautious monetary stance. The current account deficit is set to widen slightly, reflecting strong import demand and subdued export growth amid global uncertainty. Risks to the outlook include renewed inflationary pressures, commodity price shocks and persistent regional insecurity. The peso’s recent appreciation provides some buffer, but the cancellation of the IMF’s Flexible Credit Line increases vulnerability to global financial volatility.

Financing risks

Financing conditions are gradually improving as inflation moderates and interest rates are expected to stay at relatively high levels throughout 2026. Colombia’s fiscal deficit remains high – projected above 4% of GDP through 2027 – due to suspended fiscal rules, the upcoming election cycle and ongoing spending pressures. Public debt is elevated, hovering slightly above 60% of GDP, and the risk premium remains above regional peers. While foreign direct investment continues to finance the current account deficit, investor sentiment is sensitive to fiscal and political developments. Insolvency data for 2025 indicated a slight uptick in business bankruptcies, particularly in construction and retail, though the overall rate remains manageable – we forecast a peak in 2026 followed by a moderate reduction in 2027. The banking sector is well capitalized, but credit growth is cautious amid regulatory tightening. An orderly electoral cycle, fiscal consolidation and credible medium-term debt anchors are essential to restore investor confidence and reduce financing risks.

Structural business environment risks

Colombia’s business environment is shaped by a mix of resilience and persistent structural challenges. The country benefits from a stable institutional framework, multiple trade agreements and a large domestic market. However, productivity growth has stagnated for over two decades, hampered by infrastructure deficits, regulatory complexity and a burdensome tax system. High informality and labor market rigidity limit competitiveness, while public spending remains inflexible, constraining growth-enhancing investments. Efforts to diversify exports and attract FDI are ongoing but face headwinds from global uncertainty and domestic policy shifts. Addressing these structural issues – through tax reform, improved infrastructure and labor market modernization – will be critical for unlocking Colombia’s long-term growth potential and reducing internal inequalities.

Political risks

Colombia faces heightened political risk in 2026 as the country prepares for general elections on 31 May, with President Petro constitutionally barred from seeking reelection. Troubled relations with the US weigh heavily on the situation. Despite nearly 60% of respondents having expressed dissatisfaction with the administration in recent surveys, voters are likely to coalesce behind the ruling coalition, while opposition forces remain fragmented across multiple platforms. Corruption and violence dominate the political agenda, but consumer confidence remains positive and elevated inflation (around 5.5%) is not dampening household consumption, thanks to extensive subsidies and public spending targeting low- and middle-income groups. Foreign interference is expected to be confined to aggressive statements and trade measures, but the risk of spillover from Venezuela remains significant, with potential for major disruption should instability escalate. Colombia’s resilient institutions and electoral tradition provide some stability, yet the deteriorating security environment, persistent polarization and risk of social unrest pose serious challenges to democratic continuity and investor confidence before and after the elections.

Trade structure by destination/origin

(% of total, 2024)

Trade structure by product

(% of total, 2024)

Contact 

Luca Moneta
Allianz Trade
+33 (0) 6 70 27 40 16
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