Colombia’s Investment Falls to a Two-Decade Low

• ▸ Gross fixed capital formation fell to 16% of GDP in 2025 — down from 24.1% in 2007 and far below the pre-pandemic average of 22%
• ▸ GDP grew 2.6% in 2025, below market expectations, with investment contracting 2.9% in Q4 while government spending rose 7.1%
• ▸ President Petro blames high interest rates; business groups point to regulatory uncertainty and insecurity as the real investment killers

Colombia’s economy grew 2.6 percent in 2025 — and the headline masks a structural crisis. Official data released by the national statistics agency DANE show that gross fixed capital formation, the standard measure of productive investment, fell to 16 percent of GDP, its lowest level in two decades. The decline has been accelerating since 2023, when the ratio was already at 16.4 percent, down from 19.1 percent in 2022 and a peak of 24.1 percent in 2007. In practical terms, for every $100 (~420,000 Colombian pesos) of national income, Colombia now dedicates only $16 to building its future. This is part of The Rio Times’ daily coverage of Colombia affairs and Latin American financial news.

The fourth quarter exposed the fragility most starkly. Investment contracted 2.9 percent year-on-year, with housing plunging 8.5 percent and other buildings and structures falling 5.3 percent. Construction, which anchors 34 subsectors of the Colombian economy, shrank 2.8 percent for the full year. Mining and hydrocarbons dropped 6.2 percent. Meanwhile, government consumption surged 7.1 percent and imports jumped 8.4 percent — an economy running on spending, not building.

Corficolombiana, one of Colombia‘s largest investment banks, calculates that the country’s capital formation remains more than 10 percent below its 2022 level — a gap that has widened precisely as peers like Brazil, Chile, Mexico, and Peru have recovered. Foreign direct investment fell 14.1 percent in 2025, according to central bank data, with non-oil, non-mining FDI collapsing 27.3 percent.

Two Diagnoses, One Problem

President Petro blames the central bank’s real interest rate, arguing that a policy rate held at 9.25 percent throughout the second half of 2025 — then raised to 10.25 percent in January 2026 — has strangled housing and construction. Business groups see a different cause. Fenalco president Jaime Cabal pointed to regulatory uncertainty and legal insecurity as the primary deterrents, while ANIF president José Ignacio López said Colombia must signal certainty on regulation, financial costs, and physical security to attract both domestic and foreign capital.

The math is unforgiving. Economist Luis Fernando Mejía warns that unless Colombia raises its investment rate above 20 percent of GDP, the country will remain trapped below 3 percent annual growth — a pace insufficient to close social gaps or sustain development. With elections in May and no consensus on the diagnosis, the prescription remains elusive.

Read More from The Rio Times

• USA & Canada Intelligence Brief for Monday, April 6, 2026
• Europe Intelligence Brief for Monday, April 6, 2026
• Cuba Exile Leadership Battle Heats Up as Transition Hopes Rise