Even in Ciudad Bolívar, a sprawling cinder block shanty town outside Bogotá, the poor seem to be itching to spend.
“It’s opening soon!” exclaims Alfredo, a day labourer, pointing at a warehouse outlet of Easy, a hardware chain. “I’ve heard it will be cheap and offer credit to people like me,” he adds, patting the pockets of his jeans.
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His mood is emblematic of how, even as other emerging economies slow, consumer credit is still propelling Colombia’s $390bn economy forward at a fair clip. Latin America’s third-biggest economy, previously better known for cocaine and conflict, is now becoming recognised for its consumption – especially among foreign investors.
That is as true of the conspicuous consumerism of uptown Bogotá, where Paris Hilton, the American heiress and socialite, has just opened a boutique, as it is of dusty Ciudad Bolívar, where many of its 1m inhabitants are refugees from the country’s 50-year long internal conflict, now subject to peace talks between the government and the Marxist Farc guerrillas.
“Consumption remains an important source of growth, propelled by the development of Colombia’s middle class,” says Alexander Rivero, senior economist at Bancolombia, Colombia’s largest commercial bank. “This makes us think the country has the potential to keep growing at a good pace.”
The rise of middle class credit is a recent story common to many emerging economies. But in Colombia, long-plagued by civil conflict, it began later and from a lower base. While credit in Brazil has doubled to 50 per cent of gross domestic product over the past decade, in Colombia it stands at 45 per cent – a 12 point increase since 2003.
Consumption now accounts for two-thirds of the economy, while the middle class has doubled to 30 per cent over the past decade, a sea change in an economy hitherto driven more by high commodity prices and light manufacturing exports.
“Colombia’s development . . . hinges on the growth of the middle class,” says Mauricio Cárdenas, finance minister. Although still one of the world’s most unequal societies, some 1.7m of Colombia’s 47m population have risen out of poverty in the past two years, according to government figures.
That, plus the structural change of better security and possibly even peace, is why multinationals have beat a path to Colombia – from international banks, such as Canada’s Nova Scotia, to regional retail giants such as Cencosud, a Chilean “multilatina” that owns the Easy hardware chain and last year bought the local assets of French retailer Carrefour for $2.5bn.
Although not immune from the global slowdown, Colombia’s economy is forecast to grow 4.3 per cent in 2013, according to the central bank, down from the rip-roaring 6 per cent expansion of 2011, but up from the 4 per cent rate forecast earlier this year thanks to a recent $2.7bn stimulus programme and a 7 per cent drop in the peso since January, a currency depreciation welcomed by the government.