What businesses in Colombia should watch out for in 2019.
As we enter into 2019, we’re under a cloud of uncertainty. Under a new president, Colombia faces some significant new challenges and some unresolved ones from prior administrations. Based on experience, these issues are unlikely to be resolved in 2019, but as we see again and again, Colombian businesses are resilient and adapt to whatever hand they’re dealt.
The key challenges that I expect to affect business confidence in 2019 are the government’s management of the Venezuelan migrant crisis; a fragile peace process; a worsening security situation; a weakening peso; and insufficient tax revenue to cover government spending on key public services.
Businesses should expect that these current macroeconomic events– such as the peso devaluation– will resonate in the short to medium term this year as microeconomic effects.
With the government searching for new revenue streams, it is quite possible that we will see the introduction of new taxes and a reinvigorated fight by the DIAN to reduce tax avoidance. Likewise, we should expect a renewed focus from the government on fighting corruption and securing the streets– allowing consumers to buy and businesses to sell.
Nevertheless, the challenge of how to integrate the already large number of migrants in the country– along with those yet to come– into an already saturated system remains daunting. In much the same way as Europe has, the Colombian government may have to turn to businesses to help solve the migrant crisis and assist in integrating “new Colombians” into local society.
The Colombian economy remains strong and the prices of oil and coal – two major exports – are stable when compared to previous years. Because of this, I remain cautiously optimistic about 2019 and expect that those businesses most affected during 2019 will be businesses that operate across borders, where currency adjustments will be much more important.