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)

Intellias has expertise in several industries including mobility, financial services, telecom and media, and retail, working with companies like HERE Technologies, HelloFresh, Rand McNally, TomTom and DKV.

“Having a well-developed tech ecosystem and technically skilled engineers, Colombia is one of the fastest-growing IT hubs in the LATAM region. Additionally, Colombia is the perfect location to set up the first delivery center in Latin America and work with our growing US client roster. By cooperating closely with Colombian IT experts, educational centers, and IT hubs, we plan to build a top-tier team of engineers who will join our efforts in digitalizing the world. We invite local developers to apply to join the Intellias team and grow with the company,” said Vitaly Sedler, CEO and co-founder of Intellias

Intellias claims to have been named the best IT employer by Forbes and EY in 2020 and 2021, and has also been named one of the most family-friendly companies in Ukraine by UNFPA. This, according to the company, is due to paying special attention to nurturing and supporting a human-to-human corporate culture. Team members can manage their careers, work remotely, master new skills, become mentors, join engineering communities, and even get insurance for their pets.

“Setting Colombia as a new global location is a big and strategic step for Intellias. We hope to get access to the world-renowned LATAM talent market, using Colombia as a key bridge, while also using Colombia’s close ties with North America to foster a strong partnership with our clients. We look forward to cooperating with Colombian specialists on top-notch engineering projects and creating outstanding digital solutions while enjoying the rich culture and diversity Colombia has to offer,” Camilo Riveros,  Intellias Employee Experience Manager for Colombia

Last year, Intellias reported 50% growth, opening new offices in Croatia, Bulgaria, Spain, Portugal, and Poland; and acquiring Digitally Inspired, a fast-growing UK-based development company focusing on retail and eCommerce industries. Intellias also has offices in Ukraine, working with the country’s engineers to launch initiatives to support the Ukrainian people during the country’s defense against Russian aggression. In 2023, the company plans to open even more locations in Colombia and India.

During the trip, Varadkar met with Colombian President Ivan Duque, and accompanied by Irish Ambassador to Colombia, Fiona Nic Dhonnacha, reached several agreements on security, education, and commerce.

Irish companies such as Smurfit Kappa, Planet Payment, Mainstream Renewable, and Irelandia Aviation already have a strong presence in Colombia.

“Colombia is a key partner for Ireland in this region. The visit of Deputy Prime Minister Varadkar confirms the interest in deepening our political and economic relations with Colombia, and takes place in the context of the recent launch of our Irish Strategy for Latin America and the Caribbean,” said Ambassador Nic Dhonnacha. ““Both countries are experiencing a very positive post-pandemic economic recovery, and this visit will allow us to explore more opportunities for trade and investment in the future.”

The Colombia-Ireland Business Network Launched

During the visit, the two countries launched a bilateral business network, with 20 initial corporate participants from both countries, in a ceremony attended by Vradkar (above left), Colombian Vice President and Foreign Minister Marta Lucia Ramirez (above center), and the Minister of Commerce, Industry and Tourism, María Ximena Lombana (above right).

“Today we had the opportunity to launch a network uniting Irish companies that are doing business here in Colombia. This includes companies that are great in different industries such as financial services, fintech, agritech, aviation, construction, engineering, education, life sciences and digital health, as well as food, beverage and other digital technologies,” said Vradkar, indicating that his government expects the business network to grow in the coming years as trade relations expand.

“We hope to see more imports from Colombia, including coffee and other products, and we look at the potential of working together on renewable energy,” he said.

“Ireland is a country that has come a long way in terms of technology and its economic growth has been amazing. During the year of confinement, it was one of the only countries that had positive growth and all thanks to the fact that it has a very solid economy based on innovation and knowledge,” added Vice President Ramirez. “For Ireland it is important to identify business opportunities in Latin America and, what better than having Colombia as a platform to be able to produce, to develop a greater presence of Irish companies, hopefully throughout the region and throughout the hemisphere.”

“Today we have new investment channels. And, today, Ireland is present in the paper sector of our country but linking it to the concept of the circular economy, where producing-conserving and conserving-producing are not a motto, but a reason for being and where we see Irish companies that perform in this sector, improving in-depth all practices, not only in reducing emissions, but also avoiding environmental damage,” said President Ivan Duque in a speech.

“It has been an extraordinary visit and I am convinced that we are going to see the strengthening of our relations at all levels.”—Tánaiste Leo Varadkar

“It is very important to highlight the role that Ireland plays in Fintech…but above all where we are accessing technologies that have been developed in Ireland. And that transfer of knowledge means a lot to us. In terms of energy transition, Ireland has been accompanying us in the goals that we have defined to be a carbon neutral country in the year 2050 and to be a country that reduces 51% of greenhouse gas emissions by the year 2030, but also we have received accompaniment and support so that this year we can declare 30% of the national territory as a protected area. And I deeply value the presence of Irish companies in this transition towards non-conventional renewable energies, where there are already players and many more will come. And now, also, we appreciate the interest of Irish companies in what will be the strategic route of green hydrogen in Colombia,” Duque continued.

Bilateral Educational Opportunities

A memorandum of understanding was signed between the Colombian Institute of Educational Credit and Technical Studies Abroad (ICETEX) and Ireland’s Department of Continuing and Higher Education, Research, Innovation and Science that facilitates the sharing of experience and practices “regarding the design of the educational system; the exchange of pedagogical practices and information; the strengthening of relations between educational institutions; and the inclusion of the arts in a transversal way in the curriculum from initial education and secondary education,” among other topics.

“This agreement with Ireland will open up opportunities for more Colombian students in Irish territory; but we also hope that it will allow us to have exchanges so that more Irish citizens are in our country and can contribute to our great objectives such as bilingualism,” said President Duque.

Solidarity with Ukraine

Varadkar praised President Duque for his leadership regarding the situation in Ukraine and in the attention to migrants. “I particularly want to recognize the leadership of the President, who has been the leader in Latin America who has come forward the most on these issues to defend democracy and the sovereignty of the territory of Ukraine. We thank him very much for that leadership. All of us in Europe are very grateful for the solidarity that Colombia has offered in response to the crisis in Ukraine.”

President Duque added: “I want to emphasize, and I am deeply honored, that today, Ireland and Colombia also work for humanitarian purposes and the unrestricted defense of democracy. Colombia has been the strongest and clearest voice in this entire Latin American and Caribbean environment, rejecting this cruel, inhumane attack that violates international law and sovereignty that Russia has committed with Ukraine. We condemn it and express our voice in all instances of multilateralism. Today we are through our participation in NATO as a strategic partner supporting humanitarian action.”

The Venezuelan Crisis

Varadkar said that “Colombia has also shown a humane approach by welcoming its neighbors from Venezuela…Giving temporary status to Venezuelan migrants is something we consider a lot in Ireland, as we are opening our doors to Ukrainians. And I think we have to take into account the humanitarian response of Colombia with the Venezuelans who have had to flee the dictatorship.”

Duque agreed, saying: “I want to emphasize that we are supporting European countries in migration management issues, since Colombia has become a benchmark in the management of 1.8 million Venezuelan migrants who have come to our country due to the opprobrium and dictatorship of Nicolas Maduro.”

Intergovernmental Issues

Varadkar signed a letter of intent with Colombian President Ivan Duque to formalize cooperation between the Irish and Colombian police force in the fight against international crime, and to facilitate the exchange of information between the two Atlantic nations.

Duque also said that progress was being made in resolving double-taxation issues between the two countries, and he hopes the two countries may finalize an agreement soon. On this, he called for urgent action by the Colombian congress.

The event will be held from December 7 to 8 in Miami with simultaneous virtual transmission over the web. Garavito will participate in the panel titled “The Digital Ecosystem in Latin America and the different ways to innovate.” Garavito’s presentation will be focused on Iris Bank’s first 5 months of operation in Colombia and the developments on which the bank is working. Currently, Iris is the only digital banking option specializing in the business segment.

Sharing the stage with Garavito are:

• Sergio Furio, Founder & CEO, Creditas
• Juan Pablo Ortega, Co-Founder, Rappi
• Hernan Kazah, Co-Founder & Managing Partner, Kaszek Ventures
• David Poritz, Co-CEO, Credijusto
• Pierpaolo Barbieri, Founder & CEO, Ualá
• Angela Strange, General Partner, Andressen Horowitz
• Paulo Passoni, Managing Partner, Latin America Fund, SoftBank

Share experiences learned and applied by peers, champions and thought leaders in industries as diverse as mining, energy, telecommunications, banking, financial services, insurance, education, government and others.

Key topics of discussion include IoT, Blockchain, Data Analytics, Artificial Intelligence, 5G, and the unique conditions presented by Latin America & The Caribbean. For more information, visit www.latamtechsummit.com and be sure to use discount codes FINANCE2021MC

This was also a significant increase compared to the 2.2% growth seen in the first quarter, the National Administrative Department of Statistics (DANE) reported today.

For the first six months of the year, growth registered at 2.5% compared to the first half of 2017.

The biggest economic drivers in the quarter were public spending, including defense, social security, education, and health services (up 5.3%); industrial manufacturing (3.7%); and retail consumer and wholesale goods (3.6%).

The recovery in industrial manufacturing has been particularly profound. The sector had fallen by 4.7% in the second quarter of 2017 compared to the prior year and now was one of the largest contributors to the nation’s growth with its 3.7% uptick.

For its part, the banking, insurance, and financial services sector saw 2.7% growth in the quarter, although its rate of increase has slowed down over the past year. In the second quarter of 2017, the sector saw 7.8% year-over-year growth.

Construction took the biggest hit this quarter, down by 7.6%, while the mining sector also saw negative growth of 2.7%. This is a repeat poor performance for both industries, each of which was also in the red in the second quarter of 2017.

The overall results, however, further support the improvement in growth that is expected to continue in 2018.

Colombian GDP grew by just 1.8% in 2017 — the lowest figure in nine years — but it is expected by most analysts to finish 2018 up at least 2.5%, with the most-optimistic predictions forecasting closer to 3.0%.

(Image credit: nattanan23 / Pixabay)

The low projections were in part due to a widespread expectation that the tax increase passed by Colombia in the final days of 2016 would weigh on consumption. Among the most controversial aspects of the tax reform was a 3% hike in a nation’s value-added tax (VAT, known as IVA in Colombia).

“The deceleration of the Colombian economy at the beginning of 2017 would reflect a loss of traction in domestic demand impacted by low consumer confidence, the entry into force of the tax reform (which affected consumption by the increase in VAT and changes in the income tax of individuals), restrictive financial conditions, and the deterioration of the labor market,” stated the Medellín-based Bancolombia in a note to investors.

As consumers adjusted to the VAT increase, retail output contracted by 0.4% in the first quarter (year over year). “That’s the first time that the sector has contracted in annual terms since 2009,” stated London-based research firm Capital Economics in a report. “What’s more, in quarter-over-quarter terms, retail output dropped by 2.1%, the biggest contraction in this sector since the series began in 2001.”

Mining (down 9.4% year over year) and construction (-1.4%) were two other sectors that experienced lower growth in the first three months of 2017 compared to the same period last year. Transportation was also down (-0.4%).

Agriculture and financial services, by contrast, were two areas that showed improvement, realizing increases of 7.7% and 4.5% year over year. Manufacturing was also up slightly (0.3%).

While the early-year growth was underwhelming compared to past quarters, most analysts expect this to be the low-water mark during a year that will see improvement in later months. Bancolombia is projecting growth of 1.8% in the second quarter of 2017, 2.5% in the third quarter, and 2.3% in the fourth quarter.

Overall, the bank is predicting an annual growth rate of 2.0%, the same rate of expansion that Colombia experienced in 2016. “As the year goes by the economy will gradually gain traction,” stated Bancolombia.

Capital Economics also said that the first quarter “should be a bottom.” It did note, however, that risks to its year-long GDP forecast of 2.0% “now lie to the downside” and that “the latest consumer confidence data suggest that the impact of the VAT hike will continue to weigh on consumer-facing sectors.”

Fitch’s assessment of the Bancolombia subsidiary was “driven by the potential support it would receive from its parent if needed,” according to a statement from Fitch Ratings. Banistmo, which the Medellín-based banking leader in Colombia acquired from HSBC in 2013, is a key subsidiary given its strategic position in Bancolombia’s geographical growth in the region.

“The significant reputational risk that its default would pose to Bancolombia justifies Banistmo’s ratings being equalized with those of its parent,” said Fitch.

With some 12% market share, as of March 2015, Banistmo was the second-largest private bank in Panama, according to the Inter-American Investment Corporation.

A full breakdown from Fitch Ratings’ assessment is included below.

Key Ratings Drivers – Viability Rating (VR)

Banistmo’s VR is highly influenced by its strong franchise and asset quality. It is one of the largest banks in Panama and has good network coverage within a competitive banking system. Fitch views Banistmo as a key player in the Panamanian banking industry due to its relevant presence across almost all of the credit segments in both retail and wholesale. Banistmo’s market share is between 12% – 13% in term of loans and deposits.

The bank’s loan portfolio is well-diversified; however, its exposure to potentially vulnerable segments, such as consumer loans, Colon free trade zone and some relevant corporate borrowers have increased the risks of potential losses. Fitch believes Banistmo’s asset quality is aligned to regional peers but remains weaker than that of its local competitors, in consideration of the higher delinquency ratios and lower reserve coverage. Nevertheless, reserve coverage complies with local regulation and the bank’s expected losses calculations.

The funding profile is a strength of the bank given its ample and granular deposit base and considering the current environment of high competition for deposits. During 2016, the bank’s institutional financing has been increasing as its relations with correspondent banks remain strong.

Since 2015, Banistmo has improved its capitalization ratios, which are comparable to its rating peers (‘bbb’ category). Fitch expects that Banistmo’s FCC ratio will remain above 13%, taking into account the non-distribution of dividends and reduced credit growth expectations. Nevertheless, a stress scenario of potential loan portfolio deterioration could rapidly reduce Banistmo’s capital ratios to the levels of 2013-2014.

Banistmo’s profitability ratios are modest and below its peers. Despite an above average net interest margin, loan impairment charges are higher and have been increasing during 2016. In recent years, operating profitability has benefited from improvements in operational efficiency, the greater relative weight of the loan portfolio in total assets and stable net interest margin. Nevertheless, profitability prospects are modest.

Key Ratings Drivers – Support Rating (SR)

Banistmo’s SR of ‘2’ denotes that in Fitch’s view the bank is a key subsidiary for Bancolombia.

Rating Sensitivities – IDRs, Support, and National Ratings

The IDRs and National Ratings of Banistmo are support-driven and aligned with its parent’s. Therefore, these ratings would mirror any changes in Bancolombia’s IDRs.

Rating Sensitivities – VR

In Fitch’s view, VR upgrades are unlikely in the foreseeable future. Over the medium term, however, Banistmo’s VR could benefit from a reduced exposure to riskier sectors and sustained improvement in profitability.

Conversely, Banistmo’s VR could be pressured if asset quality deterioration undermines the bank’s financial performance, causing a decline in its FCC ratio or weakening its reserve coverage. More specifically, Banistmo’s VR could be downgraded if its FCC-to-weighted assets and/or tangible common equity-to-tangible assets ratios consistently fall below 9% or 7%, respectively.

Fitch has affirmed the following ratings: Banistmo, S.A.

• Long-term IDR at ‘BBB’; Outlook Negative;
• Short-term IDR at ‘F2’;
• Support Rating at ‘2’;
• Viability Rating at ‘bbb-‘;
• Long-term National rating at ‘AAA(pan)’; Outlook revised to Negative from Stable;
• Short-term National rating at ‘F1+(pan)’.

Moreover, this year has been marked by the inflation in more than a decade and a half, deteriorating macroeconomic fundamentals, and a rejected peace deal that has sent the nation into political chaos. But a new economic forecast from Bancolombia suggests that the worst will soon be over.

“We believe that in the second half of 2016 the Colombian economy is bottoming, and from 2017 a turnaround that will lead to a more constructive macroeconomic environment will consolidate,” wrote the nation’s largest bank this week. “The catalysts of this transformation will be the moderate increase in the terms of trade and growth of trading partners, falling inflation and the cycle of rate cuts to be started soon by the Central Bank, the faster pace of implementation of infrastructure projects, improving the confidence of agents and stabilization of the external imbalance and the exchange rate.”

The turnaround story will be similar throughout emerging markets while the United States and, especially, the Eurozone experience continued difficulties. For Colombia specifically, the better outlook is the result of improved expectations for trade partners in 2017 (with 1.6% growth as a baseline projection) compared to 2016 (1.1%), and “a floor for oil prices to consolidate around $45 USD, and prices to increase to $55 USD in 2017.”

Domestic economic activity will also jump. In the first half of 2016, the 2.3% growth was the worst seen since 2009, and leading indicators suggest the third quarter results will be even lower, partially as a result of the 45-day trucker strike earlier this summer. The recovery will still only be minimal in the fourth quarter before it begins in earnest next year.

“Although the process of adjustment to a new less favorable external reality is not over and significant risks remain, we believe that gradually several factors will gain traction which will help boost productive activity by stimulating aggregate demand,” wrote Bancolombia.

One of those risks is that tax reform, which President Juan Manuel Santos sent to Congress this week, will not pass — or go through in a watered-down form. But presuming the reform is finalized this year, 2017 will be the first year since oil prices tanked in 2014 that then government deficit decreases. These factors will drive the recovery, along with increased private investment, high expansion in the financial services sector, better growth in mining and agriculture, and improved exports (which fell 0.7% in 2015 and are forecasted to grow 3.0% in 2017).

If Bancolombia’s projections hold, the turnaround could extend well beyond 2017. “We estimate that the acceleration cycle starting in 2017 will extend over the next two years,” wrote the bank. “Indeed, our baseline scenario assumes that in 2018 the economy would grow 3.4% and in 2019 it’d reach 4.0%.”

This optimistic projection would be related to good returns from the much-hyped Fourth Generation — or 4G — infrastructure project that will overhaul Colombia’s disastrous road and transportation network. It also presumes that inflation returns to near the central bank’s target range of between 2% to 4% and that this fuels stronger household purchasing power.

But if this story plays out as expected, then Bancolombia believes that 2015 and 2016 will end up being bumps in the road during the ongoing growth trajectory that the Colombian economy had been on until the oil prices suddenly plummeted two years ago.

“We believe the growth potential will only rebound again at the end of the decade … From 2019 the country’s potential growth could start to accelerate on behalf of the boost to capital accumulation and the productivity that would bring the investment program in infrastructure and a more efficient and equitable tax system” wrote Bancolombia.

Now, as the world market continues to evolve, so too is NEC. It is increasingly moving into services, with the Internet of Things and biometric technology taking on a central role in the company’s strategy.

Photo: Loren Moss of Finance Colombia (L) sits down to talk about NEC’s operations in Colombia and abroad with Kukita Shinya (R), the Japanese company’s chief engineer.

The Tokyo-based technology firm also has a large presence in Colombia. One of its biggest success stories is outfitting a football stadium in Medellín with face-recognition technology that has helped increase security during events.

To discuss this innovation and NEC’s other pioneering advancements, Loren Moss of Finance Colombia recently sat down with Kukita Shinya, the firm’s chief engineer. He explains NEC’s shifting business strategy, its work in the Internet of Things, and how biometrics is becoming an ever-larger factor in the financial services industry.

Finance Colombia: NEC now has less of a presence in consumer electronics and much more of a presence in industry and business. That probably was a strategic decision that the company took some time ago. But tell me, where does NEC fit in that whole universe?

Kukita Shinya: As a company, as you correctly mentioned, we are not doing home appliances anymore, and actually we are not doing the mobile handset anymore. We have started to focus on what we call the social solutions: at this moment, consumer products, industrial, and social.

In industrial and social, the boundary is a little ambiguous. For the international market, our strength at this moment is still on the telecom carrier market, including microwave transmissions, Netcracker OSS/BSS, submarine systems, and all the other components of infrastructure. But we say we focus on social solutions starting from our biometrics identification technologies, like fingerprints and facial recognition. The solutions applied to the stadium in Medellín are one example. That’s our story.

Finance Colombia: I know the Internet of Things is a big area now as well. What is NEC focusing on in terms of IoT?

Kukita Shinya: I categorize the IoT into three different parts: personal IoT, industrial IoT, and social IoT. Personal IoT is like wearables, wristbands, glass-wear, or home appliances. And then for industrial IoT — actually there are different types of industrial IoT — with the most famous one being the jet engine of General Electric. They monitor the status of their own products.

Finance Colombia: Right. The engines themselves are feeding back to the provider, to General Electric.

Kukita Shinya, chief engineer at NEC, explains how a stadium in Medellín is using NEC face-recognition technology to “pick out the hooligans.”

Kukita Shinya: Exactly. So that means the motivation is the manufacturer maintaining the relationship with customers for an extended period of time.

In the past, every manufacturer tried to do that, either with loyalty programs or membership or those kinds of things. But those are very weak. People can easily stop using those programs. But with IoT it’s wired — it’s connected — so it’s very strong.

Finance Colombia: There’s less “churn” in the relationship. It’s stickier. You’re buying a relationship with General Electric — not just a jet engine — and General Electric is going to make money over the lifetime of the service of the product versus just from having a one-time hardware sale. It’s brilliant.

Kukita Shinya: Exactly. And another type is very similar, where the monitor is attached to a moving object. It’s similar to the jet-engine case, but this one used by operators, for example, in a bus. They want to monitor the exact location of the bus to give better information to the passengers, and they can be used to monitor driving behavior, too.

Finance Colombia: So you know when the next one is coming? You see that on the trains in the subways. It says, “three minutes until the next one.”

Kukita Shinya: Yes. Another industrial IoT focus is the manufacturing process. “Industry 4.0.” Sometimes IoT means Industry 4.0, some people say, but Industry 4.0 is, more specifically, for manufacturers and, even more specifically, driven by the German government. So you know, we are participating in this industrial part as well.

They are using our unique technology, like the fingerprint of things or coordination programs among factories — not only within the factories but also across the factories, including raw material suppliers and distribution channels. End-to-end manufacturing.

But for us, the most significant IoT is social IoT. And this social IoT is almost a synonym for “Smart City,” with various sensors, networks, data analysis, and body codes on top. So this is very much a résumé of our recent focus on social solutions.

Finance Colombia: As an example, can you talk about what NEC has done, or what Medellín has done here in Colombia, using NEC technology? It’s all very innovative, especially what you all have been able to accomplish in the football, or soccer, stadium.

Kukita Shinya: With the face-recognition technologies, we have been working on this from scratch — from the research level, for over 20 years — and the speed and accuracy of our face recognition has been recognized as number-one technology by NIST, the National Institute of Standards and Technology.

Using this world-number-one technology, we can pick out the hooligans — or the bad actors — in the stadium through video imaging instead of needing the person stop at the still cameras. We can capture the face as the people are moving.

And similar technology can be applied to the “passway” between the plane and the airport building. In “the skybridge.” We can deploy the camera with the recognition systems so that we can capture the image crossing over the bridge before they reach the immigration office so that the officials can be well prepared.

Actually, that’s the technology we deployed in the press room at the Olympics in Rio just months ago. So they could go through security just with facial recognition.

Finance Colombia: Something that’s interesting is that the use of biometrics is different in different parts of the world. Different cultures have different expectations of privacy. In the U.S., we tend to be rebels and not like anything the government wants to do — just because the government said it. Here in Colombia, on the other hand, it’s very common to use biometrics. You go into a bank, you make a transaction with cash, and the bank takes your fingerprint. If somebody sends you money with a money transfer service, they take your fingerprint.  

What do you see in the future regarding the use of biometric technology? What are some of the innovations that will not just improve security but improve the customer experience when it comes to the banking and the financial sector?

Kukita Shinya: Absolutely. There are ongoing trials for proof-of-concept things that use only biometric information for retail shopping. Obviously that’s for convenience. People don’t have to carry their credit card or even their wallet. They can purchase things with their fingerprint.

Finance Colombia: I’m told that in Brazil you can go to an ATM and take out money just with your fingerprint.

Kukita Shinya: Yes. The different applications are under study right now. And a lot of it is about privacy and security versus convenience and the quality of experience. They are a trade-off in many cases. If you try to improve the convenience, you need to sacrifice some privacy or security. That’s the common saying. But we don’t want to compromise either one.

So privacy is an issue and — as you just rightly mentioned — that is quite different from country to country. Expectations exist, so we cannot apply a single global rule for these things. But our aim is to overcome these trade-offs. We’d like to achieve both, and we have to choose the correct method for each country.