2025/12/02 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
Transfers help keep CAD at manageable levels. A USD 2.9 billion current account deficit was recorded in 3Q25, equivalent to 2.4% of GDP (USD 1.3 billion higher than in 3Q24). The deficit was below the Bloomberg market consensus of USD 3.0 billion and our USD 3.3 billion call. Despite an increase in the goods trade deficit, strong remittance dynamics along with a mild surplus in the services balance helped contain the CAD in 3Q25. In fact excluding remittances, the current account deficit would have stood at 7.7% of GDP. With this outcome, the rolling 4Q current account deficit increased by 0.2pp from 2Q25 to 2.2% of GDP (1.8% in 2024). At the margin, our own seasonal adjustment shows the annualized deficits sits at 2.6% of GDP, broadly stable with the 2.5% of GDP observed 2Q25.
Milder income deficit offset the widening trade deficit for goods. Exports increased 2.4% YoY during 3Q25 (-3.2% YoY in 2Q25), while imports expanded 13.2% YoY (+8.2% YoY in 2Q25). As a result, the goods trade deficit widened by USD 1.7 billion from 3Q24 to USD 4.0 billion. Meanwhile, the services balance rose USD 0.2 billion from 3Q24 to a surplus of USD 0.1 billion. Transfers reached USD 4.2 billion (up by USD 0.1 billion from 3Q24 and equivalent to 5.3% of GDP). Meanwhile, the income deficit reached USD 3.2 billion (4.0% of GDP; 4.2% of GDP in 3Q24), amid low global oil prices.
FDI no longer fully covers the CAD. Direct investment into Colombia came in at USD 2.9 billion in 3Q25, USD 0.4 billion down from last year. Net direct investment reached USD 1.9 billion (a USD 0.6 drop from 3Q24), resulting in USD 8.6 billion for the rolling year, only achieving a 91% coverage of the CAD (133% in 2024; 187% in 2023). Finally, net foreign portfolio investments recorded a USD 4.8 billion inflow, equivalent to 6.1% of GDP during 3Q25 (USD 3.8 billion inflow in 2Q25; 4.8% of GDP), as foreigners purchased local bonds during the quarter for USD 5.7 billion.
Our View: We expect the current account deficit to widen to 2.8% of GDP this year (with a downside bias), compared to 1.8% in 2024, driven primarily by stronger domestic demand.