Colombia in 2.012 : big growth may tempt traders (GXG, AND)

Colombia will most likely see the region’s second-highest GDP growth next year as strong domestic demand and credit expansion drive the economy.

Foreign investment, especially in the oil & gas sector, continues to set records after the country regained its investment-grade credit rating from the three major agencies this year.

Trade accounts may improve as well with the recent ratification of the Free Trade Agreement with the U.S.and thawing relations with neighboring Venezuela.

Unemployment has recently decreased to 9.2%, an historic low, which should help to drive consumer demand through next year.

The central bank has been one of the few around the region to continue rate increases in the face of slowing global growth. 

The central bank raised rates to 4.75% at their November meeting as inflationary pressures from domestic demand and credit expansion pushed the year-over-year CPI to the upper end of the bank’s range.

The rate, at the high end in the region, should help moderate pricing pressures but should not significantly reduce growth estimates.

Two funds grant investors exposure to the general market, the Global X Andean fund (AND, quote) holds approximately a third of assets in Colombian equities and the Global X FTSE Colombia 20 (GXG, quote) invests in the most liquid stocks on the market.