Aside from some dynastic billionaires, until recently new wealth was viewed with suspicion in Colombia, being a possible result of drug trafficking.
But times seem to have changed. Although drug kingpins still exist, they are less conspicuous – gone are the times of Pablo Escobar’s hippos and Rasguño’s Ferraris – while legitimate fortunes appear to be on the rise. That’s according to WealthInsight, a research company, that claims that in recent times Colombia has created millionaires quicker than Brazil and Mexico.
According to their report released late last week and titled Colombia: Paisas and their Pesos:
Colombia’s prospering economy has created more millionaires over past five years than the world average. Volumes rose by 39%, whereas worldwide they declined by 0.3%… The 14,000 new millionaires created over the past five years put Colombia’s total millionaire population at 35,900 at the end of 2012… There are 435 multimillionaires … in Colombia, an increase of 49% from 292 individuals in 2007.
The rise of wealthy individuals is a story common to many emerging economies. But in a Colombia long-plagued by civil conflict, it has begun later than in some and from a lower base. “The rate at which millionaires are created is an influential indicator of the wider economy,” says WealthInsight’s Oliver Williams
Certainly, the Andean country has made huge strides in the past decade in security as well as economic terms, turning into a hotspot for foreign investors. Some of Colombia’s leading companies have endured rough times and in recent years have expanded abroad with market capitalisations enviable to many in the developed world.
All of that appears to have contributed to the broadening of the top of the pyramid in Colombia – be it in number of millionaires (individuals with $1m or more) or multi-millionaries (individuals with $30m or more).
Even if the country’s economy is forecast to grow some 4 per cent in 2013, down from the rip-roaring 6 per cent expansion of 2011, it seems it is still providing enough of a boost to increase the number of wealthy people. For WealthInsight:
We anticipate Colombia to carry on creating millionaires at a record rate. The total number of Colombian millionaires is forecast to grow by 36%, to reach over 48,600 in 2017… WealthInsight expects there will be strong growth in wealth held by Colombian multimillionaires; their wealth is projected to increase 28% to reach US$89 billion by 2017… The number of multimillionaires, however, will grow faster. WealthInsight expects the number to increase by 36%, to reach 590 multimillionaires in 2017
The report states that fast moving consumer goods is the main industry that has generated wealth among multimillionaires. This in a country where consumption now accounts for two-thirds of the economy, and where there is a growing middle class with access to consumer credit. And for the wealthier there has been a proliferation of high-end stores in cities such as Bogotá – from Montblanc to Maseratti dealerships – in recent years.
Although there has been some reduction in inequality, this country of roughly 47m people still has one of Latin America’s most uneven wealth distributions. Williams from WealthInsight acknowledges that, saying that “equality is extremely important in a country where there is still a large segment of the population below the poverty line.”
Nonetheless, he says that that wealth distribution in Colombia “is well below the global average: Colombia’s 35,900 millionaires control 22 per cent of total individual wealth in the country which is below the worldwide average of 29 per cent and far off some other emerging nations.”
Colombia: Loyalty is biggest barrier to new entrants, Special Reports, FT
Colombia grapples with aftermath of protests by farmers, FT,
Colombia Q2: a surprise fillip, beyondbrics
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