Colombia’s Current Account Deficit Set to Widen From 2.4% to 3.3% of GDP by 2029

Colombia will see its current account deficit grow from $11 billion (2.4% of GDP) in 2025 to about $18.5 billion (3.3%) by 2029. Three forces drive this shift: a rising import bill, weak oil and mineral prices, and strong domestic demand.

Remittances, at nearly 4% of GDP, and a likely services surplus will cover part of the gap. Still, Colombia must borrow more from abroad or use reserves to balance its external accounts.

Low commodity prices curb export revenues and limit profit outflows from foreign firms. That keeps factor income payments near pandemic levels. Meanwhile, Colombians spend more on foreign-made goods and services as consumption and investment rebound.

Tourism receipts and lower shipping costs will help the services balance. Foreign direct investment in mining, transport, hospitality, and manufacturing will keep flowing, although non-commodity industries face growth challenges.

A widening deficit raises debt-service costs and exposes the peso to shocks. Policymakers may need tighter fiscal or monetary policies to reassure investors. That could slow growth and squeeze public budgets.

Colombia’s situation resembles a household buying more foreign goods than it sells abroad. It must borrow or tap savings to pay its bills.

Over time, higher debt and falling reserves make the country more vulnerable to interest-rate hikes and global turmoil. To close the gap, Colombia needs more diversified exports and stronger domestic industries.

Prudent debt management and policies that boost non-commodity sectors will prove essential. Otherwise, tighter financing conditions may limit the nation’s long-term growth.

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