Colombia earthquake may shave 0.27 points off 2026 GDP growth

Colombia's Gross Domestic Product (GDP) growth this year is projected to be reduced by 0.27 percentage points due to the magnitude 7.4 earthquake that struck on August 10. An analysis by economic firm Lumen Economic Intelligence indicates that the seismic event will have a measurable impact on the nation's economic output.

The study factored in the government's estimate that the reconstruction efforts, coordinated by the Fondo Milagro, will cost around thirty trillion pesos, equivalent to approximately $9.5 billion USD. Lumen Economic Intelligence forecasts that while the earthquake will dampen growth by 0.27 points in 2026, the subsequent normalization of activities and reconstruction spending will contribute positively in the following years, adding 0.20 points in 2027 and 0.08 points in 2028.

The impact is not uniform across the country, with the departments most severely affected by the earthquake experiencing a more pronounced reduction in their economic growth. Chocó, where the epicenter was located, is expected to see its growth decrease by 2.34 percentage points this year. Other heavily impacted regions include Risaralda (-2.5 points), Quindío (-2.11 points), Valle del Cauca (-1.75 points), and Caldas (-1.48 points). These five departments collectively represent 14.5% of Colombia's national GDP.

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According to our estimates, the earthquake would subtract 0.27 percentage points from GDP growth in 2026, while the normalization of activity and reconstruction would contribute 0.20 points in 2027 and 0.08 points in 2028.

Lumen Economic Intelligence identified three key aspects contributing to the earthquake's impact on growth: reduced production due to the destruction of public buildings, temporary interruptions in economic activity caused by infrastructure damage and mobility restrictions, and the subsequent reconstruction spending. The firm noted that while the aggregate macroeconomic impact at the national level is relatively contained, it is significantly more severe in the economies of the most affected departments.

The study's findings underscore the vulnerability of regional economies to natural disasters and highlight the long-term economic consequences that require substantial investment in rebuilding and recovery efforts. The projected contributions to GDP in 2027 and 2028 from reconstruction activities suggest a path toward economic recovery, albeit with a considerable initial setback.

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These figures measure how much lower the growth of each department would be compared to a scenario without an earthquake.