Economy of Colombia

Colombia is primarily an agrarian nation, and its agricultural sector once was dependent on coffee as its principal cash crop. However, the country successfully diversified its economy beginning in the late 1980s when international coffee prices declined. In 1991 the government implemented sweeping economic reform measures, which opened the economy to international trade and investment and helped the economy expand. It continued to grow until the late 1990s with the rapid development of oil and coal and increased prices for coffee. By the end of the 20th century, however, Colombia had fallen into a recession due to a combination of low world oil prices, reduced export demand, and diminished investment flow.

Moreover, domestic growth and foreign investment were hindered by an inadequate energy and transportation infrastructure and by the widespread violence stemming from drug trafficking and guerrilla insurgencies. The Bank of the Republic raised interest rates and tightened its monetary policy to defend the Colombian peso against worsening trade and fiscal deficits. In addition the country’s unemployment rate rose to almost 20 percent by the end of the 1990s. The economy began to recover in the early 2000s as the government cut spending. A wealth tax of 1 percent was introduced in 2002 to reduce the deficit and secure loans from the International Monetary Fund. The unemployment rate began to fall.

The central government budget included revenues of $50 billion (2007) and expenditures of $52.9 billion (2007). The gross domestic product (GDP) in 2007 was $207.8 billion, or about $4,723.80 per capita. Not included in these official statistics is the economic impact of coca cultivation and the illegal drug trade, including cocaine, marijuana, and opium. Encarta
	Economy of Colombia. Encarta