Peace premium set to buoy investment
The headwinds caused by falling oil and mineral prices are easing and economic growth was set on an upward path through 2017 with year-on-year growth reaching 2.2 percent in the final quarter. This did not prevent a downgrade by Standard & Poor in the nation’s credit rating in December, which will raise the cost of borrowing.
2018 looks brighter. GDP growth should continue rising, buoyed by the peace agreement, lower taxation, better financing conditions and new infrastructure projects that should attract more investment.
The Fourth Generation public-private partnership infrastructure programme is fuelling massive road and highway development, with many projects due to complete by 2020. 30 key projects worth USD25bn will expand the road network by 11,000km.
Among a series of large projects to go out to tender in 2018, the prize contract is the USD7.5bn Bogotá Metro project providing a 28-station network on a 27km route.
|Cost escalation 2017–18:||1.1%|
|Cost escalation 2018–19:||5.0%|
|Location factor (USD):||50.1|
Infrastructure will remain the driver for construction activity. Investment in airports, seaports, urban transportation, road and rail is expected to soar. The peace agreement raised expectations of significant investments across all sectors of society. The US-Colombia Trade Promotion Agreement is proving beneficial, lowering trade barriers to construction equipment and professional services.
The 2018 presidential election does, however, bring uncertainty.
This content is part of the International construction market survey 2018