Surviving in Colombia

Colombia's economy grew 5.3% in 1993, 5.7% in 1994, and it is expected that this year's growth will stand between 4.5 an 5.5%. In spite of all the security problems, lack of justice, and intense drug traffic activity, the Colombians have found a way to maintain the best growth rate in the region during the last 25 years. This confirms a popular saying in Colombia: "Things go wrong for the country buy the economy runs well."

According to the Colombian magazine Semana, the growth rates of the 100 largest businesses reached 25.1% in 1994; revenues were up 123.8% and total patrimony increased 64%. Of the 200 companies considered in this ranking, only seven reported losses. During the same period of time, inflation reached 22.6%.

One of the indicators that help in understanding the economic situation is the car sales index, which has grown considerably since 1992, when car imports increased 123%. In 1993, vehicle imports grew by 218%, due to the economic openness started by ex- president Gaviria. The evaluation of the Colombian peso against the US dollar contributed as well as the unsatisfied demand which existed as a result of the previous policy which favored local automobile assembly factories. Only in 1994, 50 different car brands from 15 countries reached the Colombian market. Competition made real prices less expensive. For example, a car that in 1991 would cost the equivalent price of 170 minimum wages, now costs only the equivalent of 100.

Another example is the beverage business, where two years ago few retailers existed. Now, competition is so strong, that there is an ongoing "war zone" among various companies to obtain clients' acceptance.

Nevertheless, constant insecurity problems, the lack of an efficient administration of justice , corruption, impunity, guerrilla, and drug trafficking have had a negative impact. Interest rates have increased between 45 and 50% annually. With an inflation rate of 20%, real interest rates stand over 25%, 10 points higher than what they used to be. As a consequence, the stock market has dropped and financial costs are higher for everyone. In addition, taxes have also increased. And as if all this is not enough, guerrilla and drug traffic are ever present.

In the middle of this economic scenario, the Colombian economy goes on. The openness process that started a few years ago is beginning to show positive results. Private enterprise in Colombia is fighting uncountable obstacles but it is standing tall.