Savings are an essential component for economic growth and stability, especially in emerging economies such as Colombia. Beyond simply representing the accumulation of unconsumed income, savings act as an engine for productive investment. High levels of domestic savings make it possible to mobilize resources towards strategic sectors (e.g. infrastructure, education and technological innovation) that strengthen a country’s productivity and competitiveness in the long term. In addition, savings help reduce dependence on external sources of financing, reducing vulnerability to international financial shocks.
It also plays a role in macroeconomic stability by providing a buffer against periods of uncertainty and facilitating the implementation of countercyclical economic policies. In the case of Colombia, after the fall in the economy’s investment rate in 2020, it has not recovered. Although a slight improvement was evidenced in 2021 and 2022, domestic savings as a percentage of GDP has followed a downward trend, falling from 16.1% in 2019 to 13.8% by 2024.
This weakness in domestic savings persists when compared to the performance of our regional peers. In 2023, gross savings in Colombia represented just 12.7% of GDP, the lowest figure among the six major Latin American economies. In contrast, Mexico, Peru and Chile recorded rates close to 19%, while Brazil and Argentina, despite facing significant macroeconomic challenges, maintained levels above 15%.
This insufficiency of domestic savings has had clear implications for the capacity to finance productive investment and, consequently, has delayed the recovery of gross fixed capital formation after pandemic. While economies such as Brazil and Mexico managed to overcome their pre-pandemic investment levels, Colombia remains behind: by the fourth quarter of 2024, investment in the country was 10.7% below pre-pandemic levels, reflecting structural difficulties in mobilizing resources for capital formation and boosting long-term economic growth. In this context, Colombia faces persistent weakness in its savings levels, which has limited its capacity to finance productive investment and has hindered recovery from pre-pandemic levels.
This low level of savings occurs in an environment marked by high level of informality in the labor market, which in 2024 reached 57.1%. Thus, 57 out of every 100 workers do not make contributions to the social security system, which not only affects their ability to save, but also leaves them without economic protection for old age. Despite the above, the role played by Pension Fund Administrators (AFPs) in strengthening private savings is noteworthy. In 2024, contributions made to private funds amounted to 25 trillion in 2024, equivalent to 11% of the gross savings of Colombian economy. Strengthening national savings -both public and private- is fundamental to increase investment levels and sustain more robust economic growth in the long term.
Source:
- Comentario Económico de ANIF, Abril 29 de 2025
