I’ve spend the last year making contact, picking brains, and analyzing the numbers. I have now formed a clear view. And it’s one of a bright future for Colombia. One of a pathway (which will certainly include some bumps) to relative prosperity.
The income of the average Colombian has doubled in less than a decade. Shiny new boutiques and restaurants line Medellín’s “Golden Mile” in the El Poblado neighborhood. Roads are tightly packed with cars – many new.
Roughly 40% of Colombia’s population is under 20. They are full of buzz and optimism. Many of their older siblings and cousins who left in the 1990s are returning… bringing with them the skills they learned on Wall Street. Canadian resource and European manufacturing companies are setting up offices in the city as well. Expat hangouts are packed with Canadian and European resource contractors.
On Wall Street, they call Colombia “the next Brazil” – with good cause. Demographics are in its favor. The country is rich in gold, oil, and hydroelectric power. It is a big coffee producer. Debt levels are low, and after two decades of economic reforms, the government is one of the most forward and outward looking in the region.
“We don’t expropriate,” President Juan Manuel Santos told a group of Spanish businessmen who arrived shortly after Argentina’s President Kirchner took control of oil company YPF. Wealthy Venezuelans are flooding into the country, also bringing oil expertise. GDP growth is running at 6%. Inflation is 3.4%.
An ambitious $100 billion infrastructure plan is in the works. It includes new roads and airports… as well as even an $8 billion Chinese-funded railway that will compete with the Panama Canal. The Chinese want to get Colombian coal out without having to incur hefty tolls in Panama.
Meanwhile, a government program calls for 200,000 new middle-class houses. The government is focused on initiatives to improve social mobility. (The lack of social mobility has historically been one of the major growth constraints in emerging countries.)