With a Divided Congress, BRICS Aspirant will Need to Address Pressures on Nation’s Economy

For Colombia, the election of President Gustavo Petro’s leftwing party in 2022 was a landmark moment for the country. 

However, since the election many of the policy decisions during his term have remained divisive, leaving a question mark over how the country will vote in its upcoming 2026 presidential elections. 

This past Sunday, Colombians headed to the polls to choose new representatives for Congress and the Senate, with over 3,000 candidates competing for 102 Senate and 182 House seats. 

Overall voter turnout was close to 50%, approximately what past election years had been, and no security incidents had been reported. 

The polls this weekend did offer some initial insights ahead of the main Presidential vote on May 31st. The current left-wing Presidential party, Historic Pact, secured 22.8% of Senate votes, while the more right-wing Democratic Center tallied 15.6%. 

Although President Petro’s left-leaning party emerged from the polls as the strongest force in the Senate, it was far from a landslide victory against right-wing leaders, the Democratic Center. With neither party able to secure an outright majority, both sides will look to form coalitions with smaller groups. 

With a divided Congress ahead, what will it mean for the nation’s economy?

Inflation is expected to rise in 2026

Colombia's economy this past year showed a moderate recovery with estimated GDP growth of 2.6%, which was supported by household consumption, a strong coffee harvest, and significant remittances. 

The country had recently taken a significant step to align itself with the BRICS bloc by joining its financial institution, although the nation is not yet a full member of the economic group.

The country’s central government deficit remained high in 2025, while Colombia’s external debt hit a record $247 billion, representing 54% of total GDP. Whether or not the current left’s presidential candidate Iván Cepeda, who is currently the odds favorite to win, ends up leading the country, the winner will be sure to inherit a heavy debt burden. 

This debt is accompanied by a number of other economic pressures. In particular, this includes President Petro announcing a 22.7% minimum wage hike across Colombia in December of 2025. 

Despite the sharp increase to the minimum wage, it is unlikely to drive an uptick in consumer spending as rising costs across the country bite. Colombia imposed a 10% VAT on gasoline and diesel, alongside a 90‑peso per gallon gasoline and 99‑peso per gallon diesel price adjustment in January. Further hikes may be on the horizon due to international energy market volatility and policy-driven decreases in local gas production and limited national reserves. 

This is set against a backdrop of rising inflation that remains well above the central bank’s 3% target. Colombia’s annual inflation rate rose to 5.29% in February 2026, from 5.35% in January, which was less than the expected 5.49%. 

These conditions will have a notable impact on Colombian businesses in 2026, with larger companies expected to bear the biggest brunt. 

Bancolombia (CIB), for example, is the largest bank in the country by far, with a 27.8% market share in Colombia's banking sector and has a strong presence in the corporate, mortgage, government, retail, and middle-market.

Large companies like these play an important role as employers and service providers. If a heated economy, rising inflation and higher costs impact businesses heavily, they may look to reduce overheads with job cuts and bank closures or stop investing in growth activities. 

In short, the downstream impact of high inflation will quickly hit the rest of the economy. Post-election, this remains a hot topic for the Colombian government in 2026. 

For investors, ETFs to consider a wait and see approach for include Global X MSCI Colombia ETF (GXG) and iShares COLCAP (ICOLCAP).

Durable investment in Colombia’s tech scene 

Over the past decade, Medellín and Bogotá have transformed into bustling innovation centers filled with startups, digital professionals, and international accelerators. This is the result of  deliberate investments in education, infrastructure, and workforce development.

Meanwhile, the rise of AI in Latin America is predicted to add half a trillion USD to the region’s GDP by 2030. 

Although rising costs are a concern, Colombia’s tech sector continues to attract investment from private companies following its strong performance in recent years. 

Software company Source Meridian has a long history in Colombia. Last year, the company organized Tech Sphere, a key AI summit for innovators and researchers in the region. Recently, the company announced executive Bob Reisenweber as its new Director of Operations, highlighting a focus on expansion and growth. 

It’s also important to recognize that the region has also carved a valuable niche as a trusted nearshoring partner for North American enterprises looking to outsource software development and engineering services. 

Global transformation experts Ness Digital Engineering have made significant investments in Latin America’s tech ecosystem in response to this demand, opening a new center of excellence for AI-driven intelligent engineering at the end of 2025 that will serve as a base for high-impact product innovation across Latin America. The organization recently named Sudip Singh as its new CEO to lead the next chapter of growth for the company. 

Yet other investments return to safer bets in the US 

The current elections in Colombia are taking place against a backdrop of regional and international conflict. Most notably, tensions between Petro’s government and President Donald Trump were pushed to breaking point by the import tariffs, the deportation of Colombian migrants and, most recently, the removal of Venezuelan President Maduro. 

International investment has historically played an important role in economic growth and development in Colombia, but the current climate means this capital may return to the safety of the US. 

VC funds are expected to place a greater focus on domestic opportunities in 2026. For example, California-based fund NovaWave Capital, led by Ali Diallo, is currently building a new AI venture studio to support AI entrepreneurs in Arizona, in addition to his work strengthening ties between Silicon Valley and other states. 

US-founded tech companies are also increasingly drawing the lion's share of funding, and we should expect even more of this in the year ahead. Prezent AI, for example, is on track to become the first business communication unicorn valued at $400M after its last fundraising round. Further, U.S. universities continue to hold top positions in global university rankings. IvySchool.ai, led by Bob Chopra, is one company trying to connect students with expert instructors from MIT, Harvard, Stanford and Wharton.

Meanwhile international companies look to be prioritizing expansion into the U.S. this year. For instance, solar prospecting startup Planno, based in Dubai, is scaling rapidly in states like New Jersey. With dense industrial zones, major warehousing clusters, complex supply chains, and some of the highest electricity prices in the country, the state represents one of the most compelling C&I solar investment markets. ADvendio, a leading omnichannel advertising management platform, is building on its foothold in the US with the launch of its Revenue OS solution.

Since March of this year, the US dollar has followed a strengthening trend against the Colombian peso. For investors, we expect higher P/E ratios for companies with revenue from the U.S.

Final word 

Despite the recent success of Colombia’s economy, the next government will need to work hard to unpack the current fiscal situation and compete against other markets in the Americas in order to continue attracting future investments.