Colombia goes to the polls with the best social indicators this century and a deficit only exceeded during the pandemic

Colombia’s recent left-wing administration left improved labor and living conditions alongside fiscal risks. Unemployment reached the lowest level of the century at 8.9%, and more than 600,000 net jobs were created by the end of 2025, despite continued informality. Multidimensional poverty fell to 9.9% in 2025, down three percentage points from 2022, reflecting better outcomes in education, health, housing, and employment. Tourism expanded sharply from 4.7 million nonresident visitors in 2022 to 6.5 million in 2025, raising revenues from $7.73 billion in 2023 to $11.166 billion in 2025. Tourism revenues surpassed coal revenues, while record coffee and cocoa prices boosted rural incomes. These gains coexist with a tightening fiscal envelope driven by profligate spending and high-rate borrowing, leaving Colombia with one of the region’s worst fiscal deficits and weak investment prospects.

"The unemployment rate is at a 21st-century low and multidimensional poverty fell to single digits for the first time. Tourism expanded and some agricultural sectors experienced a boom. Those achievements coexist with a fiscal threat and weak investment that could jeopardize the future. Profligate public spending, borrowing at high rates, and stable tax revenue have tightened the fiscal envelope."

"According to the UN Economic Commission for Latin America and the Caribbean (ECLAC), Colombia is already the Latin American country with the second-worst fiscal deficit. The successor to Gustavo Petro, who will take office on August 7, inherits several favorable indicators. The labor market, although still dominated by informal jobs, closed 2025 with more than 600,000 net jobs created and the lowest unemployment rate of this century (8.9%)."

"Multidimensional poverty which does not measure income but social conditions in education, health, housing, and employment finished 2025 at 9.9%, three percentage points below the 2022 figure, marking an improvement in living conditions for millions of Colombians. By sector, tourism soared. Between 2022 and 2025 Colombia went from receiving 4.7 million to 6.5 million nonresident visitors, flooding the country with dollars: $7.73 billion in 2023 to $11.166 billion in 2025."

"For the first time, tourism revenues surpassed those from coal, an industry that, along with hydrocarbons (a major tax contributor), is in decline under a president who has distanced himself from fossil fuels in what he frames as a life-or-death choice. In rural areas, record prices for coffee and cocoa have injected fresh cash into hundreds of thousands of farming households."

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