Colombia GDP Tracker Falls Below 2% as Industry Contracts

The Colombia economy started 2026 on soft footing. DANE’s monthly economic tracking indicator, the ISE, grew 1.55% year-on-year in January — the weakest reading since February 2025 and the first time in 11 months the figure has fallen below 2%.

The Rio Times, the Latin American financial news outlet, examines why the slowdown is concentrated in precisely the sectors Colombia needs most — mining, manufacturing, and agriculture — while government-driven services carry the entire weight of positive growth.

Services Carry a Lopsided Colombia Economy

Tertiary activities — services — were the only sector posting growth, expanding 2.7%. Within that category, public administration, defense, education, and healthcare led with 4.5% growth. Utilities (electricity, gas, and water) rose 3.1%, and commerce, transport, and hospitality added 2.6%.

This pattern has become structural. Services have been the strongest-performing sector in every month since December 2024, consistently outpacing both primary and secondary activities by wide margins.

But the composition raises questions: public administration alone accounts for 30.1% of the tertiary sub-index, meaning government payroll expansion — not private-sector dynamism — is doing the heavy lifting. Analysts at Bancolombia and ANDI have repeatedly warned that growth powered by state spending rather than productive investment is fragile and difficult to sustain.

Mining and Farming Turn Negative

Primary activities — agriculture, livestock, and extractive industries — contracted 2.4%, the first negative reading since February 2025 when they fell 1.7%. The drilling data confirms the trend: according to Campetrol, Colombia’s petroleum industry chamber, active rigs in December 2025 stood at 110, still seven below the three-year high of 117 reached in December 2023.

Campetrol projects 112 rigs in January, 111 in February, and 114 in March — stable but well short of recovery. The broader industrial production index fell 0.5% in January, with mining contracting 4% alone. Gross fixed capital formation has fallen to just 16% of GDP, the lowest level in two decades, starving extractive and industrial sectors of the capital needed to modernize.

Manufacturing Stalls After Brief Recovery

The secondary sector’s -1% reading in January erased a six-month streak of modest gains that peaked at +0.7% in September and October. DANE‘s separate monthly manufacturing survey confirmed the weakness: real production fell 0.5% and sales dropped 0.7%.

ANDI president Bruce Mac Master attributed the reversal to the escalating trade dispute with Ecuador, smuggling, unfair commercial practices, rising input costs, and inflation’s drag on domestic demand. “These fronts must be addressed by the government — otherwise it will be impossible to reverse the trend,” Mac Master said.

External pressures compound the problem. The global tariff environment under Trump’s trade escalation has disrupted commodity markets and input pricing, while the Colombia-Ecuador border dispute — which has seen tariffs rise to 50% on Colombian goods — is directly cutting off a key export market for manufacturers in border regions.

What Comes Next

Analysts project Colombia’s full-year GDP growth between 2.3% and 3.0%, depending on the source. The Banco de la República raised its policy rate to 10.25% in January — higher than markets expected — while Fedesarrollo’s economic uncertainty index spiked to multi-year highs at the start of 2026.

With presidential elections in May and S&P having downgraded Colombia’s credit rating to BB with a negative outlook, the January ISE reading confirms what business leaders already feel: the Colombia economy is growing, but not in the places that create lasting private-sector jobs or attract the capital formation the country desperately needs.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error