{"id":12404,"title":"Will Peace in Colombia Boost Growth?","link":"https:\/\/bst-europe.eu\/de\/globalization\/will-peace-in-colombia-boost-growth\/","date":"7. September 2016","date_unix":1473246458,"date_modified_unix":1473246458,"date_iso":"2016-09-07T11:07:38+00:00","content":"
\"Mix<\/a>
Mix CucombreLibre @flickr.com \/ Julian Serrato @unsplash.com<\/figcaption><\/figure>\n

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In late 2015, I asked both Colombian President Juan Manuel Santos and Finance Minister Mauricio C\u00e1rdenas one simple question \u2013 what single policy could best generate sustainable growth? In separate interviews, both answered simply and without hesitation: \u201cPeace\u201d. \u00a0<\/em><\/p>\n

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Colombia has faced brutal civil conflict with FARC rebels for the last five decades. The violence killed over 200,000 and left seven million people displaced; it not only ripped families apart, but pulled at the fabric of the country itself, at various points leaving massive tracks of land off limits to the state.<\/p>\n

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\u201cPeace alone would lead to roughly 1.5 and 2 percent annual growth for life,\u201d stated President Santos.<\/a> Finance Minister C\u00e1rdenas agreed, sighting Colombia\u2019s recent strong economic performance despite years of ongoing civil conflict. \u201cWe can assume that the country will be even more successful in a peaceful environment.\u201d (Full interview online here<\/a>)<\/p>\n

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On August 24, 2016\u2014almost a year to date after our interview\u2014President Santos announced just such a peace. After years of dialogues with rebel leaders in Havana, Cuba, his government has come to terms of an agreement that would start with FARC guerrillas submitting their arms to a United Nations team, and would feature the group’s reintegration into society.<\/p>\n

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So can the rapid growth promised by the government be far behind?<\/p>\n

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Colombia certainly has built economic momentum: It has averaged 4.6 percent annual growth over the last ten years, despite the Global Recession of 2008-09 that threw so many economies off course. Colombia\u2019s macroeconomic foundation has matured rapidly \u2013 sure, it faces currency fluctuations like many emerging markets at the moment, but it has thus far withstood market turbulence, and remains dedicated to a floating peso<\/em>. Inflation has averaged a modest 3.3 percent over the last five years. With the civil conflict waning, investment has become safer and more attractive, averaging 23.8 percent increases annually <\/em>over the last decade (Source: IMF Data).<\/p>\n

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In short, the country is a Pacific Puma<\/a> \u2013 our nickname for the most exciting and dynamic economies in Latin America at the moment.<\/p>\n

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Nevertheless, it faces important challenges. For example, one critical hindrance is infrastructure: Colombia is rich in natural resources, but getting those resources to port can be as expensive as shipping them to Asia. A dearth of quality roads and ports has prevented Colombia from fully taking advantage of the free trade agreements it has signed with the EU, US and various Asian countries.<\/p>\n

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Can a peace agreement with FARC rebels really address these deep-seated problems?<\/p>\n

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