The month split into two distinct phases, Grupo Cibest’s analysts wrote. Early in August, the Banco de la República (Bank of the Republic), Colombia’s central bank, surprised markets. Its board had voted at a July 31 session to hold the benchmark interest rate at 12% and to build up to $4 billion USD in international reserves through a new options-auction mechanism; when the bank ran the program’s first auction on August 3, buying $400 million USD, according to El Universal, the combination of the rate hold and the new dollar demand pushed the dollar down further against the peso. The mood reversed after August 27, when the government of President Abelardo de la Espriella, who took office August 7, submitted a revised 2027 National Budget to Congress that acknowledged a far deeper deterioration in public finances than previously disclosed.

The peso weakened sharply in the final days of August as the 2027 National Budget rattled markets. (Source: SetFX, prepared by Grupo Cibest; chart: Finance Colombia)

The revised budget raised the government’s projected total fiscal deficit from 5.3% to 7.2% of gross domestic product for 2026, and from 4.5% to 9.4% of gross domestic product for 2027, after incorporating obligations tied to debt service, pensions, health care, payroll costs, energy subsidies and the Fuel Price Stabilization Fund that had previously been underestimated. Grupo Cibest called the disclosure “a necessary reality check” and said clarity on the government’s medium-term fiscal adjustment plan, which has yet to be published, would be critical to the peso’s direction from here.

The 2027 National Budget nearly doubled the projected fiscal gap for both years. (Source: Colombia’s Ministry of Finance, prepared by Grupo Cibest; chart: Finance Colombia)

The currency’s slide happened despite favorable conditions abroad. The US Dollar Index fell 0.5% in August after a weak employment report, while Brent crude gained 0.3% to close the month at $90.04 USD per barrel — a combination that would typically support, not weaken, an emerging-market currency like the peso. Grupo Cibest said the divergence showed the depreciation was driven almost entirely by local, not global, factors.

A weaker dollar and firmer oil prices should have supported the peso in August; instead it depreciated. (Source: LSEG Workspace and SetFX, prepared by Grupo Cibest; chart: Finance Colombia)

Even with August’s reversal, the broader trend remains firmly in the peso’s favor. The exchange rate stayed below both its 50-day and 100-day moving averages for most of the month, and Grupo Cibest noted that the medium-term technical structure remains bearish for the dollar, with all three moving averages still trending downward. Analysts at Corficolombiana attributed the rally mainly to lower political and fiscal risk premiums tied to Colombia’s change of government rather than to any structural improvement in economic fundamentals, and it expects a partial correction in the exchange rate in the months ahead.

The exchange rate closed August below all three moving averages, a sign of sustained peso strength. (Source: LSEG Workspace, prepared by Grupo Cibest; chart: Finance Colombia)

The strong peso has split Colombia’s export sector from its import-dependent businesses and consumers. Between January and May, exporters stopped receiving approximately $12.2 trillion COP in revenue as a direct consequence of the currency’s appreciation, according to the same Corficolombiana analysis, with coal, bananas, flowers, coffee and labor-intensive manufacturing among the hardest-hit categories. Fenalco noted that those losses have been compounded by higher labor costs and by new United States tariffs on Colombian goods, which combine a 10% universal duty with an additional 2.5-percentage-point surcharge tied to labor-standards enforcement, and it pointed to Colombia’s 12% policy rate, one of the highest in the region, as a magnet for the short-term capital inflows that have helped drive the appreciation. Bruce Mac Master, president of the National Business Association of Colombia (ANDI), said in August that the trend was already undermining the country’s competitiveness as an exporter.

“The dollar is reaching levels of COP3,000, which without a doubt puts us in a very complex situation and takes away our competitiveness. It significantly affects exporters’ income when they convert it into pesos.”

— Bruce Mac Master, president, ANDI

Mac Master said Colombia should study measures to discourage those capital inflows, arguing that the central bank’s inflation mandate now competes with a bigger risk: eroding the country’s productive base. Corficolombiana’s own numbers suggest the picture is more mixed than exporters’ losses alone would indicate. The research firm estimated that cheaper imports saved Colombian businesses and households about $15.6 trillion COP over the same five months, for a net national benefit of roughly $3.4 trillion COP, and it found no significant widening of the trade deficit so far, in part because Colombia’s oil and gold exports have benefited from higher international prices even as their peso-denominated value has been squeezed by the exchange rate.

Tourism has felt a similar split. The association of travel and tourism agencies, Anato, told La República that the arrival of non-resident visitors fell 1.6% between January and May compared with the same period in 2025, as the stronger peso made Colombia a less attractive low-cost destination for foreign travelers. “The appreciation of the Colombian peso can create the perception of a more expensive country for foreigners, a situation that is worsened when combined with risk factors such as informality, security perceptions and travel warnings,” the association said. Anato’s executive president, Paula Cortés Calle, said the currency move complicates outbound travel as well: although a weaker dollar is usually seen as an incentive for Colombians to travel abroad, she said, the operational reality for travel agencies is more complex because of the time gap between quoting a trip and paying international suppliers.

Grupo Cibest expects the exchange rate to trade within a COP3,100-COP3,300 range in September, with risk running in both directions. On the upside for the dollar, the firm is watching the government’s promised Economic Rescue Act proposal, which it said would be critical in assessing Colombia’s ability to stabilize its public debt trajectory, along with continued pressure on US dollar liquidity. Foreign exchange intermediaries’ spot dollar cash position stood at $1.4 billion USD on August 9 before turning negative later in the month; Grupo Cibest expects it to settle near $800 million USD, well below the 2026 year-to-date average of $3.1 billion USD.

Dollar liquidity among foreign exchange intermediaries tightened sharply in the second half of August. (Source: Superintendencia Financiera de Colombia, prepared by Grupo Cibest; chart: Finance Colombia)

On the downside for the dollar, Grupo Cibest pointed to continued carry-trade activity, in which investors borrow in low-rate currencies to invest in higher-yielding Colombian assets, as well as to the central bank’s plan to keep purchasing close to $400 million USD in reserves per month through September. Additional support for the peso could also come from international aid tied to the reconstruction effort following the magnitude-7.4 earthquake that struck Chocó and neighboring departments on August 10.

As of September 7, the exchange rate stood at COP3,126, near the middle of Grupo Cibest’s forecast band, according to a market report carried by El Universal. Colombia’s August inflation figure, due the same day, was expected to remain above 6%, a reading that would keep pressure on the central bank to hold its policy rate steady even as the fiscal picture it revealed at the end of August continues to work through the market.

The magnitude 7.4 earthquake struck on August 10, centered near San José del Palmar, in Chocó, killing at least 111 people on its first day, according to Finance Colombia’s coverage of the disaster, which also drew $1.3 billion USD in international pledges in the weeks that followed, Finance Colombia reported at the time. Colombia’s disaster-management agency, UNGRD, put the toll at 331 deaths, 111 people still missing and 36,326 homes completely destroyed as of a September 7 update — the same day as the Chocó summit — according to Semana.

Officials are calling the new initiative Colombia’s own “Plan Marshall,” a reference to the US-funded program that rebuilt Western Europe after World War II. The goal, De La Espriella’s government said, is not simply to repair what the earthquake destroyed, but to use the reconstruction to close Chocó’s longstanding economic gaps and draw new investment to one of the country’s poorest departments.

“I don’t want 100 small, scattered initiatives, each going its own way, with every ministry announcing its own program,” De La Espriella told the assembled executives, according to Valora Analitik. “We are going to do proper planning, set clear priorities, secure the resources we need and, as a government, I am committing to stay on top of execution so that things actually happen.”

Among the projects announced is the Malecón Gastronómico de Quibdó (Quibdó Gastronomic Waterfront), a new promenade along the Atrato River in the departmental capital meant to revive tourism and commerce there. Chocó Governor Nubia Córdoba said financing for the project is guaranteed through contributions from the business sector, according to El Colombiano. A separate $1 trillion COP infrastructure and connectivity package will fund five road projects to improve Chocó’s links to the rest of the country, split evenly between Colombia’s works-for-taxes program and direct private investment, according to Valora Analitik.

The strategy contemplates new commercialization opportunities for Chocó producers, through direct-purchase mechanisms that will connect local production with large business chains. (Photo courtesy Presidencia de la República)

A $5 billion COP seed-capital fund, channeled through iNNpulsa Colombia with contributions from Colombina (BVC: COLOMBINA), Bancolombia, the banking arm of Grupo Cibest (NYSE: CIB; BVC: CIBEST), and Tecnoglass (NASDAQ: TGLS), is intended to benefit roughly 1,000 entrepreneurs affected by the earthquake, with about $5 million COP going to each business, Commerce Minister Gómez Amín said, according to El Colombiano.

The Ministerio de Comercio, Industria y Turismo (Ministry of Commerce, Industry and Tourism), known in Colombia as MinCIT, is leading several of the measures aimed at accelerating the region’s economic recovery. Nuquí and Bahía Solano, two Pacific coast municipalities in the earthquake-affected zone, were selected for a tourism-development push under what officials are calling a “Pueblos Milagro” strategy, backed by Fontur — the Fondo Nacional de Turismo (National Tourism Fund) — and the Fundación Santo Domingo.

Tourism is one of the strategic sectors of the agenda for Chocó, with the strengthening of tourist destinations such as Nuquí and Bahía Solano, selected among the municipalities in the affected zones that will be supported through Fontur. (Photo courtesy Presidencia de la República)

Companies including Olímpica, Grupo Nutresa (BVC: NUTRESA) and Colombina pledged to buy directly from Chocó producers, aiming to connect them with larger markets, the government said. Separately, officials said they will promote sales of biche, a traditional Pacific-coast spirit made by Chocó producers, through the Central Mayorista de Antioquia wholesale market in Itagüí, near Medellín.

The package also includes financial-inclusion measures, 100 scholarships for young Chocoanos — 50 of them pledged directly by Grupo Nutresa, according to Valora Analitik — solar-power generation for Pacific communities, a special regime meant to formalize small-scale mining, and a special tax and legal regime the government says is designed to attract private investment to the department. Officials also said they will study the feasibility of an interoceanic canal or a rail corridor linking the Urabá region with a deep-water port on Chocó’s Pacific coast.

De La Espriella framed the plan as a long-term commitment rather than a one-time relief effort.

“Chocó was not born to be poor. We are not simply going to rebuild what was lost — we are going to connect the department, attract investment, generate jobs and open opportunities. Government and business are united so that this time, promises become facts.”

— President Abelardo De La Espriella

Commerce, Industry and Tourism Minister Mauricio Gómez Amín said the government wants the reconstruction to leave a lasting economic footprint: “We have a historic opportunity to turn reconstruction into development. The challenge now is to translate these commitments into investment, jobs, new markets and concrete results for the people of Chocó.”

According to Valora Analitik, the business leaders who met with De La Espriella included Alejandro Santo Domingo of Valorem; brothers Jaime and Gabriel Gilinski of Grupo Gilinski; a representative of the Organización Ardila Lülle; David Vélez, founder of Nubank‘s parent, Nu Holdings (NYSE: NU); Bancolombia chief executive Juan Carlos Mora; Fuad Char of Olímpica; Colombina’s César Caicedo; Tecnoglass’s Christian Daes; and Miguel Cortés Kotal of Grupo Bolívar (BVC: GRUBOLIVAR).

Headline photo:Commerce, Industry and Tourism Minister Mauricio Gómez Amín speaks on the Chocó reconstruction plan.

The Colombian peso strengthened 7.5% against the US dollar in July, closing the month at 3,158.44 COP per dollar, a decline of 257 COP from June, according to a report published August 4 by Bancolombia‘s Economic, Industry & Market Research Area. The Medellín-based bank is the flagship banking subsidiary of Grupo Cibest (NYSE: CIB; BVC: PFCIBEST), the group’s holding company, which took on its current name in a 2025 corporate reorganization that renamed the former Bancolombia S.A. parent entity while the banking business itself continued operating under the Bancolombia name. A global sell-off in the US dollar, rising oil prices, optimism over Colombia’s incoming government and heavy dollar sales by local market participants combined to push the exchange rate below the level suggested by its underlying fundamentals, the report said.

During the month, the USDCOP exchange rate fluctuated between 3,086 COP and 3,432 COP. Persistent dollar sales by local participants pushed the Relative Strength Index, a technical momentum gauge, into oversold territory — a reading below 30 — for 19 of July’s trading sessions, with the index ranging between 20.2 and 31.8 over the month.

The Colombian peso strengthened through most of July before paring some of its gains in the final trading session, closing at 3,158.44 COP per dollar. (Chart: SetFx / Bancolombia’s Economic, Industry & Market Research Area)

At the end of July, the Banco de la República (Bank of the Republic, Colombia’s central bank) voted by majority to hold its benchmark interest rate at 12.00%, defying market expectations of a hike of 50 to 75 basis points. The board also launched a program to gradually accumulate up to $4 billion USD in international reserves, the report said. “The persistent appreciation of the Colombian peso provided the majority of Board members with room to pause the policy rate cycle,” Bancolombia’s analysts wrote, even as Colombia’s headline inflation accelerated to 6.14% in June.

The peso’s rally tracked a broader retreat in the US dollar. The DXY index, a benchmark that tracks the currency against a basket of major peers, fell 1.5% in July, allowing most G10 and regional currencies to strengthen against the dollar; the Chilean peso was the only major currency in Bancolombia’s peer comparison to weaken instead. The dollar posted its steepest losses during the final week of July, a decline the report tied to a ceasefire in the Middle East, weaker-than-expected US GDP growth, and the Federal Reserve‘s decision to hold its benchmark rate in a range of 3.50% to 3.75%. The European Central Bank held its own rate at 2.25%, and the Bank of Japan kept its policy rate at 1.0%, its highest level since 1995, amid market expectations that Japanese authorities could intervene to support the yen. Bancolombia’s analysts noted that the US Treasury Department had reportedly told certain financial institutions it could also conduct foreign exchange operations to support the Japanese currency.

Brent crude oil prices climbed 23.5% in July to close at $90.09 USD per barrel, while West Texas Intermediate crude rose 21.8% to $84.67 USD, the report said. Tensions in the Middle East drove much of the increase: Trump declared the ceasefire with Iran over on July 8, and after Houthi militants struck two Saudi oil tankers in the Red Sea on July 23, he threatened a major US military response against Iran and the Houthi movement. Crude prices gave back part of their gains in the final week of the month after the United States suspended airstrikes on Iran and negotiations toward a peace agreement resumed.

Locally, the appreciation was driven mainly by domestic flows rather than foreign investors, according to the report. Colombia’s corporate sector posted net dollar sales of roughly $500 million USD during July, and institutional investors supplied additional dollars in the final weeks of the month. Offshore investors, who had been net sellers of about $500 million USD in the spot and next-day markets in June, shifted to a net-buying position in July. Bancolombia attributed continued interest in Colombia’s carry trade — in which investors borrow in a low-yielding currency to invest in a higher-yielding one — to the policy rate hiking cycle that began in January 2026 and to elevated yields on Colombia’s peso-denominated government bonds, known as TES.

Bancolombia expects the exchange rate to trade between 3,150 COP and 3,350 COP in August, saying some of the local factors behind July’s rally are likely to correct. The bank flagged the central bank’s new reserve-accumulation program as a risk that could push the peso weaker, since additional dollar purchases by the Banco de la República would increase demand for foreign currency. Bancolombia expects markets to keep a favorable bias toward Colombia’s incoming government, though how the new administration handles fiscal consolidation will be crucial to sustaining that view; the report said the incoming administration could introduce a new tax reform proposal and undertake a broad reassessment of the fiscal accounts. Risks tied to carry trade positioning still point toward further peso strength, Bancolombia said, but the central bank’s decision to leave rates unchanged in July could help trigger an upward correction in the exchange rate — meaning a weaker peso — in the weeks ahead.

Above image: The headquarters of the Banco de la República, Colombia’s central bank, in downtown Bogotá. (Photo: Banco de la República handout)

Colombia’s sociopolitical environment is at its most stable point in nearly two years, according to a monthly indicator published by Bancolombia’s macroeconomic research team, part of Grupo Cibest (NYSE: CIB; BVC: CIBEST, PFCIBEST), the financial holding group into which Bancolombia was restructured in 2025. The Sociopolitical Momentum Indicator closed August at 0.50 points, up 0.01 point from July and 0.03 point above its year-to-date average of 0.47, crossing the threshold the bank defines as the boundary between “uncertain” and “fluid” sociopolitical conditions.

Colombia’s Sociopolitical Momentum Indicator rose to 0.50 in August 2026, crossing the threshold Grupo Cibest defines as the boundary between uncertain and fluid conditions. (Data: Grupo Cibest calculations; chart: Finance Colombia)

The indicator has risen 19.6% since the start of the year, Grupo Cibest’s macroeconomic research team said, despite a slight pullback in early August. The bank described the second half of the year’s evolution as the most favorable on record, meaning the seasonal correction the indicator typically shows at the start of the third quarter has this year been steeper than in recent years. Grupo Cibest said momentum has since stagnated, dating from August 19, but that 2026 could still finish as one of the years with the greatest cumulative improvement in Colombia’s local sociopolitical environment — a change in the indicator that the bank said would rank second only to years such as 2007, which was marked by a positive international perception of Colombia and improving domestic security conditions.

Day-to-day, the indicator has held above the 0.5-point “fluid conditions” threshold continuously since August 14, a level that also matched the month’s closing figure. It peaked at 0.51 points on August 17 — the highest daily reading since December 26, 2024, one of the last days in nearly two years the index spent more than a single day in fluid territory, according to Grupo Cibest. The bank said the past two weeks of data point to what could be the start of a more sustained shift toward favorable conditions.

The reading follows a change of government in Bogotá. Abelardo de la Espriella was inaugurated president on August 7, 2026, El Tiempo reported, after he defeated Pacto Histórico’s Iván Cepeda in a June 21, 2026, runoff, beginning a four-year term that de la Espriella has said will prioritize public security. Grupo Cibest’s report does not attribute August’s reading to any single event.

Grupo Cibest builds the indicator using the Global Database of Events, Language, and Tone (GDELT), which monitors media outlets worldwide in real time and automatically classifies the tone and intensity of sociopolitical events affecting Colombia. The bank treats each news item as a distinct event, categorizes it as cooperative or conflictive, and weights it for relevance to Colombia; the daily indicator then measures the share of that sociopolitical activity dominated by uncertainty-related events against total interactions, on a scale where 0 represents fully uncertain conditions and 1 represents fully fluid conditions.

The August report was signed by Manuela Bernal, regional analyst; José Luis Mojica, macroeconomic manager; and Laura Clavijo, chief economist and head, all of Bancolombia’s macroeconomic research department.

Headline photo: A mother and her young son share pastries at breakfast. (Photo: Image by OleksandrPidvalnyi from Pixabay)

Colombia’s national gross domestic product figures obscure significant differences among the country’s departments, according to an analysis by the economic research team at Bancolombia, the banking subsidiary of Grupo Cibest S.A. (NYSE: CIB; BVC: CIBEST, PFCIBEST). Based on 2025 preliminary departmental GDP data and departmental economic activity indicators for the first half of 2026 published by Colombia’s Departamento Administrativo Nacional de Estadística (DANE), the analysis shows that a small number of regions account for most of the country’s output while others remain much more exposed to individual industries and commodity cycles.

“Some departments start from a more favorable position to face a cyclical challenge in their most productive sector.” – Bancolombia’s Economic Research team

Colombia’s economy grew 2.2% year over year in the first quarter of 2026, but the national figure masks a wide range of regional outcomes. Santander led departmental growth at 3.1%, followed by Antioquia at 2.9%, Cundinamarca at 2.7%, Bogotá D.C. at 2.5% and Valle del Cauca at 2.3%, according to the Bancolombia analysis. All five outperformed the national economy.

This regional picture comes as Colombia’s broader growth outlook remains constrained by inflation and fiscal pressures. Grupo Cibest previously cut its full-year 2026 growth forecast to 2.6%, while Bancolombia’s more recent consumption data showed real household consumption growth slowing to 1.2% in the second quarter, its weakest pace in more than a year.

Five of Colombia’s largest regional economies outperformed national GDP growth in the first quarter of 2026. Source: DANE; calculations by Bancolombia / Grupo Cibest.

A small group of departments dominates national output

Bogotá D.C. accounted for 25.4% of Colombia’s national GDP in 2025, according to preliminary DANE figures. Commerce, transportation and lodging, together with financial services, underpin the capital’s economic weight, with Bogotá accounting for roughly half of the country’s financial-sector value added.

Antioquia, whose capital is Medellín, contributed 15.0% of national GDP. Its economy is more diversified, combining manufacturing and agriculture with commerce and services. Valle del Cauca, home to Cali, contributed another 9.8%, with commerce operating alongside a substantial manufacturing base.

Together, Bogotá D.C., Antioquia and Valle del Cauca represented 50.2% of Colombia’s GDP in 2025. DANE independently reports that these three economies accounted for nearly half of national output. Adding Santander, Cundinamarca and Atlántico brings the six largest departmental economies to 67.3% of Colombia’s total GDP.

Bogotá, Antioquia and Valle del Cauca together accounted for 50.2% of Colombia’s 2025 GDP. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

That concentration is not simply a reflection of population. It also reflects decades of accumulated infrastructure, specialized labor, financial activity and established production chains. DANE’s departmental GDP series shows Bogotá D.C. and Antioquia as the country’s two largest departmental economies, while Vaupés and Guainía remain at the opposite end of the scale.

A consumption-driven model faces a tougher test

Bancolombia’s researchers caution that the strength of commerce and services in the largest departmental economies does not eliminate concerns about the durability of consumption-led growth.

Household income is likely to face pressure from elevated inflation, interest rates, unemployment and weaker remittance inflows, according to the analysis. Bancolombia’s August consumption report provides a similar signal: real consumption grew 1.2% in the second quarter of 2026, the lowest rate in more than a year, with every major region losing momentum compared with the previous quarter.

That makes the performance of other sectors increasingly important. Bancolombia points specifically to mining and construction as activities with greater potential for a rebound as Colombia’s economic cycle develops.

For the country’s departments, however, the implications are very different depending on their underlying economic structure. A slowdown in household consumption can have a relatively broad impact on diversified economies, while a recovery in commodities can have a disproportionately large effect on regions where mining and hydrocarbons dominate.

Where Colombia’s departments specialize

Bancolombia’s researchers use a location quotient to identify the sectors in which individual departments are unusually specialized. The measure compares the weight of a sector in a department’s economy with that sector’s weight nationally.

A location quotient of 1 means that the sector has approximately the same relative importance locally as it does in Colombia as a whole. A figure above 1 indicates that the sector is more important to that department than it is nationally.

The differences can be striking. Meta recorded a location quotient of 9.0 for mining and quarrying, with the sector accounting for 36.7% of the department’s GDP. Casanare recorded a quotient of 8.1, La Guajira 7.3, Arauca 7.0 and Cesar 6.7.

By contrast, Vichada had a location quotient of 3.8 for agriculture, while San Andrés recorded a quotient of 3.0 for commerce, transportation and lodging.

Mining dominates the economic profiles of several commodity-producing departments, while agriculture and commerce dominate elsewhere. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

The concentration of mining and hydrocarbons in departments such as La Guajira, Cesar, Casanare and Meta means their economic performance is more closely connected to international commodity prices and production cycles than that of the country’s largest diversified economies.

That exposure was visible in the first quarter of 2026. Cesar and Meta each recorded a 0.3% year-over-year contraction, while Casanare contracted 2.0%.

The pattern does not necessarily mean that specialization is a permanent disadvantage. Instead, it means that regional performance can change sharply when the economic cycle turns. A recovery in mining, housing and infrastructure investment could disproportionately benefit departments that already have the workforce, companies and physical capacity required to expand those activities.

Bancolombia therefore expects some commodity-dependent regions to have greater room for recovery if those sectors regain momentum. Bolívar and Boyacá, meanwhile, could benefit from a recovery in construction given their relatively high specialization in that activity.

Diversification creates a different kind of resilience

The distinction between specialization and diversification becomes clearer when Bancolombia’s production-concentration coefficient is applied to departmental economies.

The coefficient ranges from 0, representing a highly diversified production structure, to 1, representing an economy concentrated in a single activity.

San Andrés recorded the highest concentration coefficient among the departments examined, at 0.39, followed by Vaupés at 0.30, Vichada at 0.25 and Guainía at 0.21.

At the other end of the scale, Antioquia had the lowest coefficient at 0.04, followed by Boyacá at 0.05, Valle del Cauca at 0.06 and Bogotá D.C. at 0.07.

Antioquia, Boyacá, Valle del Cauca and Bogotá have among Colombia’s most diversified regional economies. Source: DANE; calculations by Bancolombia / Grupo Cibest. Chart: Finance Colombia.

The distinction matters because diversification can provide a degree of protection against shocks concentrated in a single industry. Antioquia, for example, combines manufacturing, agriculture, commerce and services rather than depending overwhelmingly on one commodity or activity.

Commodity specialization can work in the opposite direction. When international prices, production volumes or investment conditions move against a dominant sector, the effects can spread through employment, local demand, government revenues and business investment across the department.

At the same time, a specialized economy can benefit rapidly when conditions turn favorable. Bancolombia’s analysis therefore frames specialization less as a weakness in itself than as a structural characteristic that determines how departments respond to different stages of the economic cycle.

Competitiveness follows a similar geographic pattern

The same concentration appears in Colombia’s competitiveness rankings.

The 2026 edition of the Índice Departamental de Competitividad, produced by the Consejo Privado de Competitividad and Universidad del Rosario, ranks Bogotá D.C., Antioquia and Valle del Cauca among the country’s strongest-performing territories. The index measures 32 departments plus Bogotá D.C. using indicators drawn from official sources.

At the opposite end, Vaupés, Vichada and Guainía rank among the weakest-performing territories.

The competitiveness gap reflects many of the same structural advantages visible in GDP data: infrastructure, human capital, institutions, connectivity and established economic networks tend to reinforce one another over long periods.

These advantages are difficult to reproduce quickly. A department cannot easily replicate in a few years the industrial base, universities, financial institutions, transport infrastructure and supplier networks that have accumulated in Bogotá, Antioquia or Valle del Cauca over decades.

That suggests that regional development policies may be more effective when they build on existing capabilities rather than attempting to create entirely new economic ecosystems from scratch.

Colombia’s regional economy is more uneven than the headline GDP suggests

Taken together, the data present two very different pictures of Colombia’s economy.

The first is a relatively small group of large, diversified departmental economies led by Bogotá D.C., Antioquia and Valle del Cauca. These regions account for roughly half of national output and combine commerce and services with manufacturing, agriculture and other activities.

The second is a much larger group of smaller economies with far greater dependence on individual sectors. In commodity-producing departments, international prices and production cycles can matter more than the trajectory of domestic household consumption. In other regions, agriculture, tourism-linked commerce or public-sector activity can play an outsized role.

That distinction matters for investors, businesses and policymakers because a national growth rate does not tell the whole story. Colombia can record moderate expansion while individual departments simultaneously experience very different combinations of growth, contraction, opportunity and risk.

Bancolombia’s latest NowCast estimated that Colombia’s economy grew 2.7% in the second quarter of 2026. The departmental analysis suggests that understanding where that growth is generated, and which sectors are responsible for it, is just as important as the headline national figure.

For regional policymakers, the implication is equally important: diversification can reduce exposure to individual shocks, but existing specialization can also become an advantage when the economic cycle turns in favor of the sectors in which a department already has deep productive capabilities.

Headline picture : Picture of Cali Colombia Cathedral (Courtesy of Cathey Comm)

Colombian President Abelardo de la Espriella announced the declaration of a state of economic, social and ecological emergency to accelerate the response and reconstruction following the magnitude 7.4 earthquake that struck August 10, leaving more than 265 people dead, nearly 3,500 injured and 495 still missing.

The extraordinary measure will temporarily allow the executive branch to issue decrees with the force of law directly related to the emergency, mobilize resources and expedite procedures that, under normal circumstances, require lengthier administrative or legislative processes.

“I am informing the country that I have decided to make use of the economic emergency, a mechanism provided for in our Constitution that will allow us to address this crisis as required,” De la Espriella said during a televised news conference.

According to figures from the Unidad Nacional para la Gestión del Riesgo de Desastres, UNGRD (National Unit for Disaster Risk Management), released by the Presidency, the earthquake also damaged the homes of about 25,800 families and affected critical infrastructure, including medical centers, pedestrian bridges, roads, aqueducts and airports.

Among the hardest-hit areas are cities such as Manizales, Pereira and Cali, as well as the department of Chocó, which was the epicenter of the earthquake. The scale of the damage now opens a reconstruction process that could extend well beyond the duration of the state of exception. But what exactly does this measure entail? Here we explain.

What is a state of economic emergency?

The state of economic, social and ecological emergency is one of three states of exception established under Colombia’s 1991 Constitution to address extraordinary circumstances.

The other two are a state of foreign war, regulated by Article 212 of the Constitution, and a state of internal disturbance for security reasons, established under Article 213. The mechanism now being used by De la Espriella is regulated by Article 215.

That article establishes that when events other than a foreign war or internal disturbance occur that “seriously and imminently disrupt or threaten to disrupt the country’s economic, social and ecological order” or constitute a “serious public calamity,” the president, with the signatures of all Cabinet ministers, may declare a state of emergency.

Each declaration may remain in effect for up to 30 days, and the different periods of emergency may not total more than 90 days within the same calendar year.

To use this mechanism, the government must demonstrate the existence of real and verifiable circumstances that represent a serious and imminent threat and explain why the state’s ordinary powers are insufficient to respond to the crisis.

In addition, measures adopted through emergency decrees must be directly related to the causes that prompted the declaration.

Video news conference by President Abelardo de la Espriella announcing a state of economic emergency in Colombia.

What can the president do during the emergency?

In practice, the mechanism temporarily expands the executive branch’s powers by allowing it to issue decrees with the force of law without initially following the ordinary legislative process in Congress.

Among the measures it can adopt are the reallocation of budget funds, creation of funds to respond to the emergency, authorization of direct contracting mechanisms, changes to tax calendars and, under applicable constitutional conditions, the establishment of temporary taxes.

Those taxes must cease to apply at the end of the following fiscal year unless Congress subsequently decides to make them permanent. Colombia has had several examples of this. In March 2026, amid heavy rains, the government of former President Gustavo Petro enacted Decree 0240, creating two temporary taxes. The first was a 16% consumption tax on gambling platforms, along with an expansion of the wealth tax.

The 30-day window will be particularly important for the immediate response. During that period, the government will be able to establish extraordinary mechanisms to assist victims, mobilize resources and launch the initial phases of reconstruction, including the potential channeling of international cooperation.

However, because the reconstruction of infrastructure and housing will likely extend for months or years, much of its implementation will subsequently have to continue through ordinary legislation and resources from the national budget.

Government announces the ‘Fondo Milagro’

De la Espriella also announced that the emergency will allow the creation of the so-called “Fondo Milagro,” a name connected to “Patria Milagro,” one of his government’s political slogans.

The president described the fund as “an entity that will channel national and international contributions, which will be allocated to the reconstruction of hospitals, educational centers, buildings, roads and airports that were damaged by the earthquake.”

The government also intends to use the extraordinary powers to promote economic recovery in the affected regions.

“The emergency must also include economic recovery measures that stimulate investment, reduce obstacles to project development and generate more jobs,” De la Espriella said.

Is it a blank check for the president?

The scope of the extraordinary powers explains why states of emergency often generate political and legal controversy in Colombia.

The ability to issue decrees with the force of law, temporarily modify certain fiscal and budgetary rules and accelerate contracting processes can be interpreted as a way to reduce the ordinary controls and procedures that normally constrain executive action.

However, the Constitution establishes specific limits.

The president cannot use the emergency to suspend fundamental rights, weaken workers’ social rights or interrupt the functioning of the other branches of government. Nor can the president use extraordinary powers to adopt decisions that are not directly aimed at addressing the causes and consequences of the emergency.

In addition, legislative decrees issued during the state of exception are automatically subject to review by the Constitutional Court.

Congress also retains its political oversight functions and may examine the reasons that led the government to declare the emergency and assess the appropriateness and timing of the measures adopted. Within its constitutional powers, it may also modify, add to or repeal certain provisions issued during the emergency.

Those checks have already had an impact in 2026: In April, 2026, the court struck down the emergency declared by Gustavo Petro in December 2025, while in June it upheld, with restrictions, another declaration issued in February.

An economic emergency and a national disaster are not the same

Before announcing the state of economic emergency, the government had declared a national disaster, a different legal mechanism.

The disaster declaration stems from Law 1523 of 2012 and is linked to the Sistema Nacional de Gestión del Riesgo de Desastres, SNGRD (National Disaster Risk Management System). Among other tools, it allows resources from that fund to be mobilized and expedites the contracting needed to provide humanitarian assistance.

The state of economic, social and ecological emergency, by contrast, is constitutionally grounded in Article 215 and grants the executive branch extraordinary and temporary legislative powers.

The two mechanisms can therefore operate in a complementary manner: One facilitates the administrative and operational management of the disaster response, while the other temporarily allows measures with the force of law to address a crisis that the government considers impossible to manage solely through ordinary mechanisms.

De la Espriella’s use of the mechanism now opens a new period of constitutional and political oversight. Although the executive branch will be able to act more quickly during the initial earthquake response, the measures it adopts must remain directly connected to the calamity and will be reviewed by both the Constitutional Court and Congress.

Colombia recorded more than 24 million non-resident visitors during the current presidential term and generated close to $34.43 billion USD in foreign exchange from travel through December 2025, figures released by the Ministry of Commerce, Industry and Tourism (Ministerio de Comercio, Industria y Turismo, or MinCIT) show. The ministry says tourism has become one of the country’s largest sources of foreign exchange, surpassing traditional export sectors such as coal and coffee.

“Today, Colombia demonstrates that it can also generate wealth from its biodiversity, its cultural heritage, the quality of its services and the talent of its people.” -Diana Marcela Morales, Former Minister of Commerce, Industry and Tourism

The figures were presented during the Foro Internacional de Turismo: Colombia, un destino por explorar (International Tourism Forum: Colombia, a Destination to Explore), held in Bogotá on July 15. The event brought together tourism associations, business leaders, academics and government officials to discuss the sector’s performance and future, including regenerative tourism, artificial intelligence, smart mobility and innovation in visitor experiences.

Promoted under the campaign Descubre la Diversidad de Colombia, El País de la Belleza (Discover the Diversity of Colombia, the Country of Beauty), the ministry reported that more than 24 million non-resident visitors arrived during the administration of President Gustavo Petro, representing a 109% increase compared with the previous equivalent period. Of those arrivals, 14.8 million were foreign visitors.

According to the Banco de la República, Colombia’s central bank, tourism generated approximately $34.43 billion USD in foreign exchange through December 2025, exceeding revenue from coal and coffee exports. Tourism has also become the country’s largest services export, with 57% of services export earnings coming from the sector.

“For decades, much of the country’s capacity to generate foreign exchange was tied to the export of raw materials,” Former Minister of Commerce, Industry and Tourism Diana Marcela Morales said. “Today, Colombia demonstrates that it can also generate wealth from its biodiversity, its cultural heritage, the quality of its services, the talent of its people and the confidence that millions of people place in choosing the country as a destination. Tourism expresses, perhaps like few other sectors, that transition toward a more diversified economy with greater added value.”

Employment has also expanded alongside visitor growth. Figures from DANE (Departamento Administrativo Nacional de Estadística, Colombia’s National Administrative Department of Statistics) show that accommodation and food service activities supported approximately 1.8 million jobs in February 2026, a 15% increase compared with the same period in 2019. During 2025, the sector accounted for 4.4% of Colombia’s national value added.

International demand has continued to grow during 2026. In the first quarter, more than 368,000 international airline tickets were sold with Colombia as the destination, representing a 16.7% increase over the previous year. The largest source markets were the United States, Brazil and Mexico.

During the first two months of 2026, approximately 10 million passengers traveled through Colombia’s airports, an 8% increase across domestic and international traffic. Between January and March, the country received 1.58 million non-resident visitors.

The government has also expanded tourism investment beyond major destinations. MinCIT reported that infrastructure projects—including trails, docks, boardwalks and gastronomic plazas—have reached 699 municipalities, representing 63% of Colombia’s territory. According to the ministry, 207 municipalities received tourism investment for the first time.

The ministry also said tourism initiatives now cover all 140 municipalities included in Colombia’s Programas de Desarrollo con Enfoque Territorial (Development Programs with a Territorial Focus, or PDET), a post-conflict development framework for areas historically affected by armed conflict. Through its Turismo para una Cultura de Paz (Tourism for a Culture of Peace) strategy, more than 999 businesses have joined the Colombia Destinos de Paz (Colombia Peace Destinations) certification.

“Unlike other economic activities, whose benefits tend to concentrate in specific production centers, tourism generates value precisely where a country’s natural, cultural and historical heritage is located,” Morales said. “It is a bridge that connects different cultures and brings opportunities to intermediate municipalities, strengthens rural economies, energizes small businesses and creates incentives to conserve what makes each territory unique.”

Headline Photo: Beachside in Barú, Colombia (photo by Loren Moss)

Colombia’s economy expanded at an estimated annual pace of 2.7% in the second quarter of 2026, according to the latest reading of the Grupo Cibest NowCast Bancolombia indicator. The figure sits 20 basis points below the rolling quarter ending in May, which the group revised upward by 20 basis points to 2.9%. With the second-quarter estimate in hand, the economy is now judged to have grown 2.4% year-over-year in the first half of the year, a pace the analysts say confirms that activity remains below its potential.

“The economy is estimated to have grown 2.4% year-over-year in the first half, confirming that economic activity remains below its potential.” — Grupo Cibest, Economic, Industry and Market Research (July 2, 2026)

NowCast Bancolombia is a family of proprietary, high-frequency indicators built by Grupo Cibest — the financial holding group that owns Bancolombia (NYSE: CIB) and adopted its current name in May 2025 — from transactions across the group’s payment channels. The indices are designed to complement, not replace, the official statistics published by the Departamento Administrativo Nacional de Estadística (DANE, the National Administrative Department of Statistics), whose figures are available through its website.

For the second quarter, the group revised its NowCast forecast upward by 10 basis points to 2.7%, bringing the projection into line with the market consensus average among analysts. The indicator rose from 2.6% at the end of May to 2.7% at the end of June, matching the 2.7% consensus.

Subdued Growth Across the Board

The monthly readings were more subdued. On a seasonally adjusted basis, the NowCast index contracted 1.2% from the prior month in June. In year-over-year terms against June 2025, growth eased to 1.9%, some 0.5 percentage points below the May reading of 2.4%. Measured as a three-month moving average, year-over-year growth held at 2.7%.

At the sector level, the second quarter showed a divergence between primary and secondary activities. Faster growth appeared in recreation, professional services, agriculture, and manufacturing. The public sector, real estate, communications, trade, and electricity utilities held steady growth rates. Construction activity continued to decelerate, while mining was the only sector to contract by the close of the quarter.

Grupo Cibest’s sector heat map, which tracks year-over-year change on a three-month moving-average basis, put entertainment as the standout in June at 9.7%, followed by financial services at 6.0%, and wholesale and retail trade at 4.0%. Manufacturing reached 3.7% and agriculture 3.5%, both near the top of their recent ranges. At the other end, construction slowed sharply to 0.6% after running above 3% for much of the past year, the information sector managed just 0.2%, and mining slipped to -0.5%.

The report was prepared by Grupo Cibest’s Economic, Industry and Market Research area, led on quantitative work by Arturo Yesid González Peña, the group’s Head of Quantitative & Analytics, with Sebastián Ospina Cuartas serving as data controller. It follows the group’s prior-month estimate, which had pointed to a second-quarter acceleration toward 2.6%.

Above: The construction industry’s growth continued to decelerate as Grupo Cibest reports a 2.7% economic growth for Colombia as a whole in the second quarter. Stock photo by Ncpancy via Pixabay.

The Colombian peso strengthened 115 pesos against the US dollar last week to close at $3,335.46 COP, a 3.35 percent weekly appreciation that Grupo Cibest’s economic research team attributed to a weaker US dollar globally and to a larger-than-expected interest-rate increase at home. In its July 6 weekly report, Radar Bancolombia, the research unit of Bancolombia argued that the currency now trades well below the level its fundamentals would justify.

The Junta Directiva del Banco de la República (the central bank’s board of directors) raised its benchmark policy rate by 75 basis points to 12.00 percent, its highest level since March 2024, surprising a market that had priced in a 50-basis-point move. Even so, the bank argued that a rate consistent with Colombia’s macroeconomic and fiscal conditions should push the exchange rate toward a range between $3,400 and $3,650 COP.

What is moving the peso?

To isolate the drivers of the currency, the research team estimated a structural vector autoregression (SVAR) model that breaks the annual change in the market representative exchange rate (TRM) into international factors, local factors, exchange-rate dynamics and a speculative gap. The exercise found that during 2026 local factors have gained prominence and now explain close to half of the peso’s movements.

In June, Colombia’s sovereign risk premium corrected sharply, reflecting an improved perception of country risk tied to the coming change of administration. The nation’s five-year credit default swaps fell 69 basis points from the first round of the presidential vote — a 29 percent annual decline in June — and now sit about 24 basis points below the level the bank considers consistent with fair value. Among regional peers, Colombia’s policy rate is exceeded only by Brazil’s 14.25 percent, which the bank said keeps carry-trade strategies attractive.

The chart shows how the Colombian peso and the US dollar has detached from the fair value rate of the government. Chart by Finance Colombia.

Measured against where it should trade if it merely tracked its peer currencies and incorporated the deterioration in external fundamentals, the exchange rate should stand near $3,720 COP, Bancolombia estimated. The bank placed the currency’s fair value in a range between $3,710 and $3,880 COP, and noted that the United States economy has shown resilience, backed by technology investment, while inflationary pressures continue to limit the room for maneuver of the US Federal Reserve.

From September 2025, the observed rate detached significantly from that fair value. The bank linked the move first to monetization by the Ministerio de Hacienda (Finance Ministry) — foreign-currency sales of roughly $9 billion USD between September and December, against average daily spot volume of about $1,337 million USD in 2026 — and later to optimism over the change of administration. Those operations drew on a Total Return Swap, new euro-denominated bond issues and a direct placement to Pimco of $23 trillion COP, which raised about $5 billion USD. The gap against peer currencies turned negative after the first-round vote and has since averaged -$225 COP.

The bank described the pattern as a trade electoral — a repricing of Colombian assets in anticipation of a more market-friendly government — that held through much of the second half of 2025 and into 2026, interrupted only when polls showed a wider gap among the presidential candidates.

Bancolombia expects the peso to stay stronger than its fundamentals over the coming months, but not indefinitely. The bank projected the exchange rate in a range between $3,400 and $3,650 COP for the second half of 2026, converging gradually toward fair value in 2027. As long as the local interest-rate cycle keeps favoring long-peso carry positions and optimism persists, the bank said, the peso could reach the lower bound of that range.

“A persistent deviation looks unlikely, since over the long run the exchange rate has not structurally departed from the level observed in its peers.” — Grupo Cibest economic research, Radar Bancolombia

On the external side, the bank flagged persistent pressure toward depreciation from falling international oil prices and limited room for further US dollar weakness. Brent crude, which rose 5.8 percent year over year in the first quarter and 51.2 percent in the second amid the Middle East conflict, had already fallen 26 percent from a peak near $118 USD per barrel to around $72 USD. The bank cautioned that sustaining the currency’s current strength would depend on credible fiscal consolidation, given challenges related to inflation, the El Niño phenomenon, weak investment, the health system, security conditions and the lag in strategic sectors such as mining, energy and construction.

International backdrop

The US unemployment rate fell 0.1 percentage point to 4.2 percent in June, its lowest in a year, the Bureau of Labor Statistics reported, though the economy added just 57,000 jobs, below the 114,000 analysts expected. Hiring concentrated in professional services, up 36,000, social assistance, up 25,000, and health, up 22,000, while lodging shed 61,000. The labor participation rate fell 0.3 percentage point to 61.5 percent, its lowest since March 2021, as 720,000 people left the labor force.

Eurozone inflation eased 0.4 percentage point to 2.8 percent in June, a three-month low and below the 3.0 percent consensus, though still a fourth month above the European Central Bank’s 2 percent target. Core inflation fell to 2.4 percent. In China, the composite purchasing managers’ index rose to 50.6, above the 50 threshold that separates expansion from contraction, with manufacturing at 50.3 and non-manufacturing at 50.2, while construction stayed in contraction.

Colombia’s economy

The Banco de la República resumed its tightening cycle, lifting the policy rate to its highest level since March 2024. Bancolombia expects a further 75-basis-point increase, to 12.75 percent, as inflation expectations drift higher. Consumer inflation was set to rise for a fourth straight month in June, to about 6.13 percent annually and its highest reading since July 2024, on the bank’s estimate of a 0.38 percent monthly gain; analysts polled by the central bank had expected 0.32 percent. Analysts see inflation ending 2026 near 6.52 percent, against the bank’s own 6.4 percent scenario.

Colombia’s national unemployment rate stood at 8.0 percent in May, down 1.04 percentage points from a year earlier and a record low for the month, according to the national statistics department (DANE). Informality was 54.2 percent, and the bank maintained its 9.0 percent urban unemployment projection for 2026. Business sentiment moved the other way: Fedesarrollo’s commercial confidence index fell to 20.5 points and its industrial confidence index to -2.9 points in May, which the bank tied to uncertainty around the presidential election.

Goods exports likely extended double-digit growth in May, to an estimated $5.46 billion USD FOB, up 25 percent year over year, led by non-traditional products — non-monetary gold, copper ores and flowers — and by oil sales at an average price near $107 USD. The bank noted a 37 percent accumulated drop in the first quarter and expected exports to stabilize following the normalization of the tariff dispute with Ecuador.

Fixed income and yields

The US Treasury curve steepened bearishly, with short-dated yields up about 8 basis points and long-dated yields up about 11, after Iran’s foreign minister said no direct US-Iran meetings were scheduled and after US Federal Reserve chair Kevin Warsh, speaking at the European Central Bank’s Sintra forum, reiterated the central bank’s commitment to its 2 percent inflation target. Citi’s economic surprise index held in positive territory for a sixth consecutive month at 57.8. Advanced-economy 10-year yields were mixed over the month, with Japan up 10 basis points and France up 3, against declines of 12 in Germany and the eurozone and 11 in the United Kingdom.

Colombia’s fixed-rate TES curve rallied, with yields down 22 basis points at the short end, 23 in the middle and 9 at the long end, supported by calmer Middle East conditions, the fall in the country’s five-year CDS to levels last seen in 2021, and announcements from the incoming government — among them, the report said, the naming of Miguel Gómez as finance minister. The cash balance of the Dirección del Tesoro Nacional (National Treasury) rose to an average of $20.7 trillion COP in June, up $5.6 trillion from May, or 1.16 percent of GDP. Tax collection grew 7.4 percent year over year in May, to $35.1 trillion COP, led by income tax at $15.3 trillion COP and internal value-added tax at $11.8 trillion COP, according to the tax authority (DIAN).

Commodities and equities

Gold rose to about $4,112 USD per ounce after the US jobs report, while Brent crude closed at $71.94 USD per barrel and West Texas Intermediate at $68.69 USD, little changed on the week as traffic through the Strait of Hormuz recovered and the Organization of the Petroleum Exporting Countries prepared to announce a production increase at its July 5 meeting.

The COLCAP index closed the week up 0.4 percent at 2,295.7 points. The biggest gainers were Cementos Argos (BVC: CEMARGOS, PFCEMARGOS), up 3.5 and 3.1 percent, and Grupo Cibest (NYSE: CIB; BVC: CIBEST), up 3.1 percent, while Davivienda (BVC: PFDAVVNDA), the PEI real estate vehicle and Grupo Nutresa (BVC: NUTRESA) led the declines. Grupo Nutresa launched a share-repurchase offer for up to 3,333,333 shares at $300,000 COP each, with an acceptance deadline of July 3. Davivienda placed $270.1 billion COP in the sixth tranche of its twelfth ordinary bond issuance, drawing offers of $343.99 billion COP.

The figure shows the change in the Colombian peso and how local and international factors seem to be affecting it in a negative direction. Chart created by Finance Colombia.

On Wall Street, the S&P 500 rose 1.8 percent, the Dow Jones 2.0 percent and the Nasdaq 2.1 percent, their best quarter in six years, led by semiconductor and artificial-intelligence infrastructure shares even as investors questioned the sustainability of those valuations. Tesla (NASDAQ: TSLA) lifted deliveries 25 percent year over year in the second quarter, and Lime (NASDAQ: LIME), the shared electric-bike and scooter operator, debuted on the Nasdaq with a $167 million USD raise and a valuation near $1.6 billion USD.

European indices advanced, with the Stoxx 600 up 2.7 percent, the DAX 4.5 percent, the CAC 40 1.5 percent, the FTSE 100 1.6 percent and the IBEX 35 2.2 percent, led by defense shares and with Siemens (XETRA: SIE) contributing to the DAX. KNDS postponed a planned Frankfurt and Paris listing, while Renk (XETRA: R3NK) agreed to acquire Britain’s David Brown Defence for about $200 million USD. In Asia, the Hang Seng rose 3.0 percent, the Nikkei 225 0.6 percent and the Shanghai Composite 0.4 percent; China Resources New Energy staged Asia’s largest listing so far in 2026, raising about $3,600 million USD in Shenzhen.

The full report, Fortaleza del peso colombiano bajo la lupa: entre el optimismo y sus fundamentales, was published by Grupo Cibest’s Dirección de Investigaciones Económicas, Sectoriales y de Mercado, led by Laura Clavijo.

Headline image description: The chart shows how the Colombian peso has depreciated significantly in comparison to other similar currencies in the market by a margin of 500 points. Chart created by Finance Colombia.

Colombia’s unemployment rate has held in single digits on a rolling-quarter basis since March 2025, but a closer look at the data shows the improvement rests on weaker foundations than the headline figure implies, according to the latest Radar Bancolombia weekly report, published June 16 by Grupo Cibest, the research arm of Bancolombia (NYSE: CIB, BVC: BCOLOMBIA).

The report’s authors argue that the jobs Colombia is adding are increasingly vulnerable, more dependent on public spending, and of lower quality — limitations the unemployment rate alone does not capture.

The inactivity behind the falling jobless rate

The unemployment rate counts only people actively looking for work, so those who stop searching — the inactive — drop out of the measure even though they still weigh on the market.

“The employment being generated is increasingly vulnerable, more dependent on public spending, and of lower quality.” — Radar Bancolombia, June 16, 2026, Grupo Cibest

Using the metaphor of an iceberg, Grupo Cibest describes unemployment, near 8.7% on a moving-year average to April 2026, as the visible portion. Meanwhile, inactivity, sits below the surface, exceeding 35% of the working-age population according to the report. Between January 2020 and February 2026, the ratio of inactive to unemployed people rose from 4 to 5 for every unemployed person, suggesting the drop in unemployment reflects not only more opportunity but also people leaving the labor force.

Formal jobs, fragile foundations

Formal employment has been rising, but the report flags long-term weaknesses. The Bancolombia Formality Index, part of a new set of employment-vulnerability indicators, closed March 2026 at 72.7 points, above its 2022–2025 average and well above the 50.5 points recorded in March 2025.

Formality and coverage of health and pension contributors both increased through 2026, which appears positive at first glance. Much of that covered employment, however, does not stem from a genuine private-sector recovery. The report’s hypothesis is that the minimum-wage increase at the start of the year raised the cost of formalizing jobs, discouraging formal hiring at the moment the economy most needed it.

Quality is the bigger worry

The Bancolombia Employment Quality Index — which weighs formal workers’ income relative to the minimum wage, the mix of dependent and independent workers, and the share of non-vulnerable formal jobs — stood at 20 points in March 2026, below the prior year and marking a change in trend from the preceding three years. The deterioration reflects a lower income relative to the minimum wage in 2026 compared with the 2022–2025 average, a narrowing gap between dependent and independent workers that points to more independent and vulnerable formal employment, and a rising share of independents within total formal workers.

The report concludes that Colombia needs sustained formalization that does not rely on public spending as the main engine of job creation, nor on minimum-wage adjustments as the main tool of labor policy. The underlying figures draw on the National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadística, DANE) and its Gran Encuesta Integrada de Hogares (Great Integrated Household Survey, GEIH), with calculations by Grupo Cibest.

Other highlights of the Report

On the domestic economy, the report noted that the Economic Policy Uncertainty Index from the think tank Fedesarrollo eased in May from a high April reading, and estimated that Colombia’s economy grew at a solid pace in April, with commerce expanding at double digits, manufacturing recovering gradually, and consumer confidence likely remaining in double digits in May.

In local markets, the fixed-rate TES curve — Colombia’s peso-denominated government bonds — gained 34 basis points on average the prior week, and the report cited a projected fiscal deficit of 5.3% of GDP under the 2026 Marco Fiscal de Mediano Plazo (Medium-Term Fiscal Framework). Pension fund managers and commercial banks led May purchases of class B TES in the secondary market. The Colombian peso appreciated in line with global and regional trends, while crude prices fell on the prospect of a US–Iran agreement and OPEC approved a fourth consecutive output increase for July.

Stock photo by Kevin Seibel via Pixabay.