The latest business confidence reading for CO, released on November 26, 2025, registered at 4.90, down from 9.00 in October and below the 8.00 consensus forecast, according to the Sigmanomics database. This figure is above the negative readings seen early in 2025 but signals a clear pullback from the mid-year optimism peak of 6.70 in August. Over the past 12 months, the average confidence level has hovered around 3.30, indicating that despite recent volatility, sentiment remains modestly positive.

Drivers this month

• Monetary tightening: Higher interest rates weighed on investment plans.
• Fiscal restraint: Government budget caution limited stimulus expectations.
• Geopolitical risks: Trade tensions with key partners dampened export outlooks.

Policy pulse

Business confidence remains below the levels consistent with robust economic expansion. The central bank’s inflation target of 3% remains a challenge amid persistent inflationary pressures, prompting cautious monetary policy. The current confidence reading suggests firms are bracing for slower growth and tighter credit conditions.

Market lens

Following the release, the local currency COP depreciated by 0.40% against the USD within the first hour, reflecting investor caution. Short-term bond yields rose by 10 basis points, signaling increased risk premiums. Equity futures showed a mild decline, particularly in sectors sensitive to domestic demand.

Business confidence is a leading indicator of economic activity, closely linked to core macroeconomic variables such as GDP growth, employment, and inflation. The Sigmanomics database shows that CO’s GDP growth slowed to 2.10% YoY in Q3 2025, down from 3.00% in Q2. Unemployment remains steady at 8.50%, while inflation hovers near 4.20%, above the central bank’s target.

Monetary Policy & Financial Conditions

The central bank has maintained a restrictive stance, with the benchmark interest rate at 7.50%, up 75 basis points since early 2025. Credit growth has decelerated to 3.20% YoY, reflecting tighter lending standards. Financial conditions indices indicate a contraction compared to the previous quarter, pressuring business sentiment.

Fiscal Policy & Government Budget

Fiscal policy remains cautious amid concerns over rising public debt, which stands at 55% of GDP. The government’s 2025 budget targets a primary surplus of 1.20%, limiting fiscal stimulus. This restraint has contributed to subdued confidence, particularly in infrastructure and capital-intensive sectors.

External Shocks & Geopolitical Risks

Trade disputes with major partners, including tariff escalations and supply chain disruptions, have increased uncertainty. Commodity price volatility, especially in oil and metals, has added to cost pressures. These external shocks have negatively influenced export-oriented businesses and dampened overall confidence.

Drivers this month

• Monetary tightening contributed -1.80 points to the decline.
• Fiscal caution subtracted -0.90 points.
• Geopolitical risks accounted for -1.40 points.
• Positive contributions from domestic demand added 0.20 points.

Policy pulse

The index’s drop below 5.00 suggests business expectations are adjusting to a less accommodative policy environment. Inflation remains above target, and the central bank’s forward guidance signals further rate hikes, which may weigh on confidence in coming months.

Market lens

Immediate reaction: The COP/USD exchange rate weakened by 0.40%, and 2-year government bond yields rose by 10 basis points post-release. Equity futures in the industrial and consumer discretionary sectors declined by 0.30% and 0.20%, respectively, reflecting investor caution.

Looking ahead, the business confidence trajectory in CO will depend on several key factors. The Sigmanomics database suggests three scenarios for the next six months:

• Bullish (30% probability): Inflation eases faster than expected, allowing the central bank to pause rate hikes. Fiscal stimulus increases moderately, and geopolitical tensions ease, lifting confidence above 7.00.
• Base (50% probability): Inflation remains sticky, prompting gradual monetary tightening. Fiscal policy stays cautious, and external risks persist. Confidence stabilizes around 4.50–5.50.
• Bearish (20% probability): Inflation spikes due to supply shocks, forcing aggressive rate hikes. Fiscal austerity intensifies amid debt concerns. Geopolitical conflicts escalate, pushing confidence below 3.00.

Structural & Long-Run Trends

Longer-term trends include gradual diversification of CO’s economy away from commodities, increased digitalization, and demographic shifts. These factors support a moderate upward trend in business confidence over the next 3–5 years, provided macro risks are managed effectively.

November’s business confidence reading of 4.90 signals a cautious mood among CO’s firms. While still above the 12-month average, the sharp drop from October’s 9.00 highlights growing concerns over monetary tightening, fiscal restraint, and geopolitical risks. The data from the Sigmanomics database underscores the need for balanced policy measures to sustain growth momentum.

Investors and policymakers should monitor inflation trends, credit conditions, and external developments closely. The interplay of these factors will shape the confidence outlook and, by extension, the broader economic trajectory in CO.

Key Markets Likely to React to Business Confidence

Business confidence in CO is a critical barometer for several asset classes. Equity markets, currency pairs, government bonds, and commodities linked to the country’s economic health typically respond to shifts in sentiment. Below are five tradable symbols with historical sensitivity to CO’s business confidence trends:

• ECOPETROL: Colombia’s largest oil company, sensitive to domestic economic outlook and commodity prices.
• COPUSD: The Colombian peso’s exchange rate versus USD, reflecting investor risk appetite and macro stability.
• BVC: Colombia’s main stock exchange index, tracking overall market sentiment.
• BTCUSD: Bitcoin’s price, often a risk-on/risk-off proxy impacting emerging market sentiment.
• USDCOP: The inverse currency pair, useful for hedging and speculative flows tied to CO’s economic outlook.

FAQs

What is the current business confidence level in CO?

The latest reading is 4.90 for November 2025, down from 9.00 in October, indicating a slowdown in optimism.

How does business confidence affect CO’s economy?

Business confidence influences investment, hiring, and production decisions, impacting GDP growth and employment.

What are the main risks to business confidence in CO?

Key risks include inflation persistence, monetary tightening, fiscal austerity, and geopolitical trade tensions.

Takeaway: CO’s business confidence decline signals caution amid tightening policies and external risks, requiring vigilant policy calibration to sustain growth.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.