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Colombia Qualifies As One Of The World’s Most Attractive Investment Markets

13 Sep
Colombia: One Of The World’s Most Attractive Investment Markets

Low Debt, Low Inflation, And Continued Growth--This Is The Third World?

In Monday’s dispatch, I wrote about misguided misperceptions that persist related to life in Colombia. Most of the world continues to think this country is a no-go zone for safety reasons. Sure, wander off into the jungle regions near the border with Ecuador or Venezuela…or wander around drunk on the street of any big city at 2 a.m….and you’ll likely run into trouble. Otherwise, as Kathie and I keep saying, we don’t understand the concern, as it’s unfounded.

Safety concerns, aside, others say Colombia is a no-go zone because it’s a Third World, developing country. That may be the case, technically speaking, but you wouldn’t know it sitting on our balcony looking out over the city below, shopping in the malls and grocery stores in El Poblado, or having dinner out at any of the dozens of very good restaurants here. Medellin is more similar to Europe and the U.S. than it is to Latin America (despite fresh milk being sold in bags, one thing we’re still wondering about).

Colombia doesn’t really qualify as Third World and not only for anecdotal reasons. Looking at regional data, Colombia stands out. Colombia is the third-largest country and the fourth-largest economy in Latin America. Surprisingly, Argentina is slightly smaller in terms of population, but its GDP is about 33% greater. That is, Colombia’s GDP per capita has some room for improvement compared with other major Latin American economies; however, it grew at an average annual rate of 4.5% from 2002 to 2011, behind only Argentina and Peru. And Colombia’s economy is expected to grow a further 4.7% in 2012, with only Peru projecting greater growth.

South America's Third-highest Ratio Of Foreign Direct Investment To GDP

Colombia also has South America’s third-highest ratio of foreign direct investment to GDP…in this case behind Chile and Peru. Oil and other exports are up. The national debt-to-GDP ratio is one of the lowest in the world. Inflation is also low, about 3% a year for the last three years.

The stock market was down significantly in 2011, but it is up in 2012. I don’t care for stock investments anyway, but Colombia offers some good opportunities in stocks and stock funds right now.

Real estate is my preferred investment class, as you know, and real estate markets in Colombia have done well the last several years and should continue to do so for the next three to five years at least.

The beauty of the current situation in Colombia is that investment markets in this country, from stocks to real estate and agriculture, should continue to do well even if there isn’t a heavy influx of foreign activity in the country (in the form of either investors or tourists). However, when the rest of the world realizes the negative news of Colombia in the past has nothing to do with the reality of Colombia today, I predict that foreigners will come, both to visit and to invest.

If you don’t take a position right now, you will have missed the boat. I’d suggest getting on a plane soon to come see for yourself what this country has to offer.

Lief Simon