Colombia's consistently sound economic policies and aggressive promotion of free trade agreements in recent years have bolstered its ability to face external shocks.
Real GDP has grown more than 4% per year for the past three years, continuing almost a decade of strong economic performance. All three major ratings agencies have upgraded Colombia's government debt to investment grade.
Nevertheless, Colombia depends heavily on oil exports, making it vulnerable to a drop in oil prices. Economic development is stymied by inadequate infrastructure, weakened further by recent flooding.
Moreover, the unemployment rate of 10.3% in 2012 is still one of Latin America's highest. The SANTOS Administration's foreign policy has focused on bolstering Colombia's commercial ties and boosting investment at home.
The US-Colombia Free Trade Agreement (FTA) was ratified by the US Congress in October 2011 and implemented in 2012. Colombia has signed or is negotiating FTAs with a number of other countries, including Canada, Chile, Mexico, Switzerland, the EU, Venezuela, South Korea, Turkey, Japan, China, Costa Rica, Panama, and Israel.
Foreign direct investment — notably in the oil and gas sectors — reached a record $10 billion in 2008 but dropped to $7.2 billion in 2009, before beginning to recover in 2010, and reached a record high of nearly $16 billion in 2012.
Colombia is the third largest Latin American exporter of oil to the United States, and the United States' largest source of imported coal.
Inequality, underemployment, and narcotrafficking remain significant challenges, and Colombia's infrastructure requires major improvements to sustain economic expansion.