Colombia and COVID-19: A Year Later

Colombia, like so many countries around the world, spent the better part of 2020 grappling with COVID-19. The pandemic, while not especially harsh in Colombia compared to other nations in the region like Ecuador and Brazil, has had widespread consequences in the country, and the recovery will take time.The virus was officially confirmed in the country on March 6, and from March 17 to September 1st, Colombia denied entry to all but permanent residents and citizens. On April 6th, a two-week nationwide lockdown was declared by president Ivan Duque, which was continually extended until September 1st.

COVID Cases Throughout the Pandemic

The lockdown and accompanying mobility restrictions had a devastating impact on Colombia’s economy, causing the country’s most severe economic recession in a century. The country’s GDP growth gate in Q2 of 2020 was down over 15% against the same time the previous year, and unemployment reached 20% nationally in July.Although all economic sectors were affected, the most hard-hit industries were manufacturing, food service, retail trade, and logistics. Avianca, the country’s largest airline and employer of over 20,000 people, filed for bankruptcy in the US. Colombia’s exports were also hard-hit, reaching -50% year-over-year totals in April.

Colombia Total Export Growth

For Colombia, the pandemic came at a time when economic growth and overall enthusiasm development were at all-time highs. The country had entered 2020 with growing confidence in a pragmatic, centristic, and economically-minded president in Ivan Duque and a much-improved global reputation that was reflected in many ways, especially in the growth of tourism.The pandemic, sadly, hamstrung Colombia’s rapid growth in a very significant way. Before the pandemic arrived, the country was experiencing very consistent periods of economic growth, rising living conditions, large reductions in crime, and the introduction of new industries and foreign investment.

The ‘Miracle of Medellín’

One of the most encouraging pieces of information to come out of Colombia last year was ’Medellín’s 40% reduction in homicides. Although it's a tough subject for many residents, the ‘80’s and ‘90’s were a very violent time for the city, which was plagued by narcotraficantes and leftist revolutionaries. The city has made an incredible comeback, reducing violence exponentially.Although Medellín’s young mayor Daniel Quintero would like to take as much credit as possible for the reduction, there are forces at play that were set into motion long before he took office. A more effective police force, as well as well-targeted programs to improve education and job opportunities, set the stage for this peaceful and bustling new city, which has attracted foreign investment from across the globe.

Colombia GDP Growth Pre-Pandemic

The news out of Medellín is particularly reassuring considering that the city has been a hub for the nation’s economic development. Before the pandemic, global market intelligence firm FDI Intelligence had ranked Medellín as the number 4 city in the Americas (including North America) for foreign direct investment strategy.This comes alongside other forms of recognition, including its pioneering efforts to become a ‘Sustainable City’. Even during the pandemic, Medellín was praised for its tech-based efforts to reduce contagions, including a city-wide contact tracing app and strict but reasonable policies for social distancing and the closure of public spaces.Having spent the entirety of the pandemic in Medellín, I can say personally that although the initial lockdown was exasperating, on the whole the city has done a fantastic job of handling the pandemic. At no point were there shortages of ICU’s or other medical infrastructure, and cases have been kept at manageable levels. Economic damage has also been kept to a minimum, and the vast majority of businesses have stayed open. The consensus is that it could have been worse.

Finding Value

So what’s the driving force behind Colombia’s rapid economic rise? Well, there’s no single cause.But one factor has definitely been the government. 30, 40 years ago, the government’s control over the country was rickety at best, and their authority didn’t extend very far beyond the confines of wealthy urban areas.Now it’s a different story. Colombia has modernized in the sense that its government now firmly exerts control over the vast majority of the country, excluding some very small and very isolated regions.

Now that it's clear who’s in charge, businesses can begin planning with confidence - especially those from outside the country. Laws to attract foreign investment have also paid off, as investors are offered an attractive premium for investing in what was once widely considered a violent and futureless country.In spite of the setbacks presented by the pandemic, there is widespread hope that Colombia will re-emerge as a hub of peace and prosperity. News from Q1 of 2021 has been encouraging, especially in the tourism sector. Although the country has struggled to cope with the COVID crisis, signs point to Colombia reviving its status as one of the world’s preeminent emerging markets.