Colombia’s Growth Miracle That Runs On Government Money

Colombia has just delivered one of the fastest growth rates in the region: the economy expanded 3.6% in the third quarter, the best result since 2022.

On paper, it looks like a small economic miracle. In reality, half of that performance came from one source: the government opening its wallet at an unusual pace.

According to official data and bank research, public spending jumped 14.2% between July and September, its fastest growth so far this century.

If you take that boost away, the economy would have grown only 1.8%. The State is not just regulating and taxing – it is now the main engine keeping demand moving.

You can see this in the job market. Of the roughly 769,000 new jobs created this year, about 113,000 are in the public sector. The government now employs close to 2.9 million people, a bit more than one in every eight workers.

That helps many families in the short term, but it also means a larger payroll that must be financed by taxes and debt in a country that already struggles with large deficits.

Colombia grows on government spending not private investment

Private demand is growing too, but in a different way. Household consumption rose 4.2% in the quarter, with strong spending on leisure, entertainment and services, while crucial productive sectors lag.

Mining shrank 7.2%, construction fell 2.7%, and investment barely advanced. Colombia is buying more from abroad as well: imports rose around 10% while exports increased by only about 2.2%, pushing the import share of GDP to its highest level since the pandemic.

Business leaders are alarmed not because growth is bad, but because of how it is being produced. The boom is powered by day-to-day government spending rather than long-term investment in infrastructure, housing, education quality or health capacity.

For expats and foreign investors, the message is simple: Colombia today looks lively and far from collapse, but too much depends on a bigger, costlier state and too little on a competitive, export-driven private sector.

If budgets tighten or confidence slips, this kind of growth can vanish quickly – leaving behind more debt, weaker fundamentals and harder choices for whoever has to clean up the accounts.

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