Colombia’s economy still has its struggles, but year-to-date those problems haven’t manifested themselves in its ETF. It’s up nearly 16% so far this year. Fiscal debt threatens to reverse the trend.
President Alvaro Uribe may have not done such a hot job in the view of some – heavy spending contributed to 2.5% growth in the fourth quarter, but it also contributed to a budget deficit of 4.5% of GDP. Minuscule compared to Greece and Italy, sure, but it’s not anything to sniff at.
It’s not without hope, though:
- Eric Sabo for BusinessWeek reports that surging foreign investment in commodities will give good support for the growth of the country going forward.
- The International Monetary Fund (IMF) projects growth of 2.5% for 2010 with inflation remaining around 2%-4%. Stronger policy and institutional framework during the financial crisis has helped the country pull out of a downward spiral.
- Colombia is forecast to attract about $10 billion in foreign direct investment this year, up from about $7.5 billion last year.
- Cocaine is fading away. The drug once was 6.3% of Colombia’s economy; today it’s less than 1%. Matthew Bristow for The Wall Street Journal reports that cocaine’s share of gross domestic product dropped when Colombia’s drug cartels lost control of key smuggling routes to cartels in Mexico and elsewhere.
- Legitimate industries such as mining and oil have taken off, and companies are looking to this country to set up business benefit from higher commodity prices.
Global X/InterBolsa FTSE Colombia 20 ETF (NYSEArca: GXG)