Choosing Medellín and Why it Remains the Right Decision

Tree-lined street in Laureles

Editor’s Note: The following is a guest post by John S.

After traveling to 26 countries thus far in my life, I ended up choosing Medellín as the location where I bought property. After the initial shock of others hearing that statement, most ask why?

I worked in a high-pressure job and I wanted to have a plan in place if I wanted to retire early. In 2010, I began in earnest to consider purchasing foreign property when I decided to have a Plan B.

I set my parameters to include a city that is comfortable, safe, healthy, has good year-round weather, inexpensive cost of living and has close proximity to my family and friends in the Midwest.

I visited Panama, Ecuador, Belize and Colombia to determine what would meet my expectations. While I enjoyed the places and people in each location, there was something different about Medellín. This resulted in my choosing Medellín as the place I bought property and now live.

Note the above photo is a tree-lined street in Laureles, which is the neighborhood where I live in Medellín.

My First Impression of Medellín

Arriving at the local international airport from Ft Lauderdale, I felt the cool mountain air blow against my face on the drive down the mountainside from the airport in Rio Negro toward Medellín.

My first glimpse of the sprawling city caught me. I had looked at many pictures but none of them did it justice. The scenery was inspiring. The trip down provided numerous quick views of the area of over three million people.

The red brick buildings and terra cotta rooftops somehow drained the tension from me. To this day, that trip still has the same impact on me every single time.

Medellín Colombia

Medellín Colombia

Choosing Medellín

The weather in general is great. This was one of the main reasons I originally considered Medellín.

During my time here I have experienced some hard rains, lightning that makes you jump out of your seat and sun making things warm enough to sweat.  In general, I walk every day with either a long sleeve or a dri-fit short sleeve shirt.

While the sun is warm, the shade is perfect. When the rain comes, it generally leaves just as quickly. I have no heat or cooling in my apartment but it has large windows facing both East and West. I open doors and windows to get a cross wind cooling the apartment in minutes.

Every night, temperatures cool after sunset typically to around 60 ° F.  Medellín is by far the best weather location I have experienced.

Finding a comfortable place that is safe was also extremely high on my requirements list. My Fitbit tells me I have walked over 1,500 miles on the streets of Medellín.

The vast majority of that walking has been in Laureles where I live and El Poblado where I work. However, I have also walked in Belén, Sabaneta, Suramericana and Envigado extensively.  I have found that many neighborhoods in the city are very walkable.

While I am careful about being present and aware and do my walking before midnight, I have yet to have an issue must less feel any level of discomfort. I recommend Medellín for comfort and safety to anyone including family.

My costs to live in Medellín are extremely low as compared to the U.S. I own my apartment. This limits my costs to groceries ($300), HOA ($125), utilities ($45), cable and Internet ($80), daily commuting transportation ($200), apartment cleaning ($200), 20 hours of private Spanish per month ($240) plus entertainment and miscellaneous bringing the total cost to around $1,500 USD per month.

Medellín offers a healthy lifestyle. I eat and cook fresh foods bought primarily from the public markets or farmers markets. I use the local supermarkets Exito and Carulla to fill the gaps between market visits.

Medellín has more than its fair share of fried food, white rice and bread as well as ice cream and sweets. However, the variety and quality of the fruits and vegetables here is remarkable.

Additionally, there are a wide variety of restaurants serving every type of international food you can imagine. I believe they use fewer preservatives and chemicals here than in the US grocery stores.

My Experiences Looking For and Buying Property

I researched Medellín real estate extensively. And I connected with a local company with extensive U.S. ties and over 10 years experience in Medellin properties.

I did not follow common advice and bought without renting first because I wanted to move forward. I had a very clear objective – purchase investment real estate to generate enough income to pay for all my expenses to live in Colombia.

The real estate company handled everything start to finish. Finding the right places, negotiating the price, meeting the sellers, opening a bank account to wire the money, all legal paperwork.

The process was long but relatively painless. The legal / government process was slow. It is typical to meet the sellers in Colombia, which I found unusual. The extensive documentation required opening an investment account in Colombia made me believe I was borrowing the money rather than wiring a deposit.

Taking the real estate company’s advice, I purchased two investment rental properties in Poblado. However, after discussions with my daughter, I decided to purchase my home where I live in Laureles, which is a true Colombian neighborhood. It is walkable, less traffic and extremely comfortable.

In my Laureles apartment, I did a complete renovation including new floors and kitchen as well as custom furniture. The renovation took four months and total cost including appliances was $45,000.

I am very happy with the decisions I made and would make the same ones today.

The Medellín Metro

The Medellín Metro

My Reasons For Recommending Medellín Have Evolved

My reasons for recommending Medellín have evolved over the months living here. After living in Medellín I have come to appreciate additional things about this wonderful city.

I now have a big appreciation for the inexpensive and reliable public transportation. I use taxis, the metro, Uber and just recently, the bus system. The fact that Medellín excels in this area should not be missed. Buses are under $1 and readily available.

The metered taxis are everywhere and cost around $5 for a 25-minute ride. My experience with Uber is not as easy as the U.S. depending on the time of day. The extensive metro system is less than $1 and is fast, efficient, clean and reliable. I don’t want or need a car and that fact is important particularly for older people.

After living here for a while, the number one reason I now choose and highly recommend Medellín is the Paisa people. Of course you can’t put all people in one basket and label them. But I have daily if not hourly experiences with people here and they go out of their way to help.

Whether it is a translation, directions or general help, the Paisa people standout worldwide. I have been invited to their homes, welcomed into my neighborhood and feel at home here after less than one year.

Another photo from Laureles

Another photo from Laureles

The Bottom Line: Choosing Medellín

My life in Medellín is better than I anticipated. There are hurdles such as the Spanish language and cultural differences.

However, the great things about this city far out weigh any downsides. The weather is fantastic and I really like not needing heating or cooling.  I commute often back to the U.S. and the three hour flight from Ft Lauderdale is quick and easy.

After living and working daily here, I feel far less stressed. I enjoy the daily advantages this city offers. Choosing Medellín continues to be the right decision for me.

About John

John is from Cedar Rapids, Iowa and lived over 50 years in the Midwest. He has traveled to 26 countries and chose to buy a home in Medellín, lives in Laureles and works in El Poblado. He has a resident visa. John travels monthly to Chicago’s North Shore to see family and friends. His passions include family, photography, the arts, business and travel.

Reminder: Join our Medellín Living March Meetup on March 23 at 7pm at Pizza en Leña located at Parque Sabaneta. This meetup is a good way to meet other expats like John living in Medellín as well as newcomers visiting or considering moving to the city.

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Comments

  1. Esteban says:

    John
    I too would like to retire in Medellin Can you speak about taxes. This is one of the main impediments for me about buying in Medellin. My retirement plans look like I will have to spend 50% of my time outside of Colombia. There is NO WAY I will give Colombia 1/3 of my modest retirement funds.

    • Hi Esteban,

      Colombian income taxes were previously covered on this site. See: http://medellinliving.com/filing-colombia-income-taxes/ Colombia has progressive income tax rates like in the U.S. with multiple tax brackets so it’s impossible to pay 1/3 of your income as taxes.

      The first bracket has a tax rate of zero, so over $10,000 in income would have an income tax rate of zero. There are two more brackets (19% and 28%) before you get to the 33% bracket. Also there are several deductions and some things exempt from taxes. Plus after calculating Colombian income taxes due you can subtract income taxes paid in another country like the U.S. from what is due in Colombia.

      I have met several expats living in Colombia that don’t pay much in Colombian income taxes and some that pay nothing. Everyone’s situation is different.

      You should talk to a Colombian tax accountant about your situation. A tax accountant can help you navigate all of the Colombian regulations, determine what you can deduct and what is exempt and estimate what income taxes (if any) you would need to pay in Colombia.

  2. Henry Lewin says:

    Hi John,

    This is a great article about Medellin ! I plan to start receiving my social security benefits by the end of this year.
    I would like to apply for the TP7 pension visa, but have not found an answer as to how many days I would be able to come and go to/from Colombia over the course of the year. Thanks in advance.

  3. I feel absolutely sure John’s decision to move to Medellin had absolutely nothing to do with all those hot paisa girls;-)

  4. Ronal David says:

    I first visited Medellin in 1975 and spent about a year here in Colombia from 75-78 and did not return due to the difficult years from 80-2007. I returned in 2013 to visit and ended up semi retiring here. I am a permanent resident approaching 70 living in LaAmerica/ Laureles.

    I love it here but have begun to realize that Medellin is no place to retire unfortunately. i will be selling out and moving to a kinder gentler safer more sane and much healthier locale. The pollution here is the highest in all of Colombia and some of the highest worldwide. Many days my lungs hurt so bad due to the air quality being unbearable. The streets here are very dangerous. Human life on the street here is valueless. Cars, buses, taxis, trucks, motorcycles and bicycle drivers have no regard for pedestrian traffic and one takes his or her life in their hands every day here avoiding getting killed. The city has virtually never planned to build an infrastructure that was meant to protect pedestrian traffic. This is a city of absolute chaos and desperation. The majority of the locals here earn about 8 dollars a day and that contributes to the desperation. There are pockets of affluence here but the pockets don’t represent the reality of Medellin. Don’t be fooled by affluent Americans here insulated from the reality of life here.

    • You are entitled to your opinion. But I respectfully disagree with everything you say. And I believe many other expats living in Medellín would also disagree.

      First of all, the pollution in Medellín isn’t the worst in Colombia and the pollution isn’t “some of the highest in the world.” The facts don’t back you up. According to this there are over 400 cities in the world with worse pollution than Medellín – https://en.wikipedia.org/wiki/List_of_most_polluted_cities_by_particulate_matter_concentration. And Medellín doesn’t have the worst pollution in Colombia on that list – Caldas ranks worse.

      The pollution also isn’t the same throughout the city of Medellín according to the city’s monitoring stations. The worst pollution tends to be in the lower parts of the valley like El Centro and Laureles. While other parts of the city tend to have less like the hills in El Poblado, Envigado or Sabaneta. Also the Oriente area to the east of the city like Rio Negro has much less pollution.

      Also I disagree with “the streets here are very dangerous” and “human life on the street here is valueless”. While it is true that pedestrians in practice don’t have the right of way but you quickly learn this after spending any time in the city. You said, “the city has virtually never planned an infrastructure that was meant to protect pedestrian traffic”. That simply isn’t true. I have walked all over the city in my nearly 7 years living in Medellín. In my experience there are sidewalks all over the city for pedestrians and most major intersections have pedestrian lights and cars/buses/motorcycles do stop at traffic lights. There are also pedestrian bridges in many places in the city to enable crossing busy roads and there are pedestrian walkways to get to metro stations. So there actually is substantial pedestrian infrastructure all over the city.

      The minimum wage in Colombia is 737,717 pesos per month that works out to over $10 per day (not $8 per day as you said) if you assume working Monday to Saturday each week. Or if you assume working Monday to Friday that is over $12 per day. Due to low incomes I have seen that many households in Colombia have multiple wage earners to make ends meet.

      Medellín isn’t a “city of absolute chaos and desperation”. Medellín was even ranked the most innovative city in the world in 2012. “Medellín’s homicide rate has plunged, nearly 80% from 1991 to 2010. The city built public libraries, parks, and schools in poor hillside neighborhoods and constructed a series of transportation links from there to its commercial and industrial centers. The links include a metro cable car system and escalators up steep hills, reducing commutation times, spurring private investment, and promoting social equity as well as environmental sustainability.” see: http://online.wsj.com/ad/cityoftheyear

  5. ‘purchase investment real estate to generate enough income to pay for all my expenses to live in Colombia’

    That’s not that easy to do. Rentals (long term) to locals generate around 4% per annum. Rentals to foreigners (generally short term) are said to be worth twice that, but then it’s an increasingly difficult market with more apart-hotel properties coming onto the market and increased local restrictions on other short term rentals. By the time you’ve taken out expenses making the equation work needs a considerable $ investment and assuming significant risk.

    Then you have the fall in the Peso which has resulted most investors in the past few years losing significant capital in $ or EUR terms. Add to that the issue of a pretty moribund housing market for the past couple of years other than prices for new builds or fincas. Even the Gringo Real Estate Agencies have gone quiet about recent price appreciation which says a lot. You’ll also notice that they’ve gone considerably up market (or at least are marketing more expensive properties in particular Fincas) as the small sub-COP500 million apartment market becomes increasingly crowded and difficult to show returns on.

    So, well done to the author if he’s making it work but for most investors in Colombia over the past few years – at least measured in terms of the dollars brought in for purchasing – it hasn’t been great and the headwinds are only growing. Interest rates in Colombia are high and combining that with low wages, even for the professional classes, and the resulting situation restricts the buying power of locals.

    Getting into the market – with the help of the Gringo agencies – as the writer says is easy. Getting out is a different situation. One doesn’t have to look far to find people who have been trying to sell properties for a couple of years or more. I even came across someone who has a property that hasn’t even had a single viewing in a year.

    • Kevin Jameson says:

      Yes the murder rate has “plunged 80%” from the 6,500 per year of 1991

      That Still leaves 1,300 per year, more than the yearly total for many countries n the world, how to mislead with statistics.101

      • Medellín uses a count of homicides per 100,000 residents like every other place to track the homicide rate. In 2015, Medellín achieved the lowest homicide rate seen in the city in over 40 years: 20.17 per 100,000 residents. This is lower than the homicide rate found in St. Louis, Baltimore, Detroit and New Orleans in the U.S.

        Misleading with statistics would be touting a total homicide count without comparing to the population.

  6. Great article John! I share a lot of your sentiments toward this city, such as the views driving in from Rio Negro. I’ve lived in San Diego and Santa Barbara and Santa Cruz in California, and Cuenca in Ecuador, and I’ve never enjoyed a better climate than Medellin’s. Sure, it rains a lot at certain times of the year, but that’s what makes everything so green and beautiful. It’s not quite paradise – it’s a large city after all – but it’s a pretty damned close. I’ve never regretted my decision to move here.

  7. Hi John!…great article. I was wondering what kind of work do you do in Medellin? I’m originally from Medellin but left the country for the U.S in 1965 when I was an infant. I’ve been back a couple times with my last visit in 1993 when Pablo Escobar had his grip on the city. It wasn’t a good visit so I never went back. I keep in touch with family and do read lot’s on Medellin’s transformation and am very motivated to visit and if I like what I see I may spend longer periods there and perhaps make a permanent move. However, I’m not quite ready to retirement yet and would need to find some way of making an income. I was wondering if you happen to know what the labor market is like in Medellin? Which industries are most in demand? Thanks.

  8. “He has a permanent residence visa. ”

    As far as I know, there’s NO permanent residence visa in Colombia at all. Maximum 5 years and you have to renew by year 5. How can you call it permanent if only 5 years? If you don’t renew by year 5, your “permanent residency” is no longer valid and you’ll be kicked out of the country!

    Do I miss anything???

    In addition, you must be in Colombia at least 1 day every 2 years for the 5-year residency to keep it valid (or minimum 6 months in a year if on a 1-year temp residency). And if you live over 183 days in a year in Colombia, you are considered a tax resident in Colombia (tax resident is not the same as resident). You will be liable for your WORLDWIDE incomes to the Colombia government. If you only have Social Security or don’t have a lot of money, it’s not an issue. For those with lots of money and businesses worldwide or from foreign countries, it’ll be definitely a problem.

    If Colombia government is smart enough not to tax worldwide income, ONLY Colombia sourced income, it’ll make more sense and attract more people to live there full time.

    Thoughts? Comments?

    • The US taxes on worldwide income why shouldn’t the Colombians? The concept (as some other countries in the region have tried) that giving tax benefits to attract foreign retirees has a very small economic impact. Tourism has a far bigger impact and the Colombians ‘spend’ their tax incentives there by not charging IVA to tourists on accomodation. And that is working well. The evidence is that the Colombians have been ‘smart’ as tourism is booming.

      There has been zero signs that the Colombians are going to move away from global income and asset taxation.

      It might be an ex-pat dream that the tax situation will be improved for foreigners but it’s likely to remain a dream. Some relief for expats might come if there was a tax treaty with the US (as there is with some other countries) but there’s been less talk about that recently. Also take into account that there are many baby boomer Colombians who currently live elsewhere who may return to retire. The Colombians have no interest in developing a system that would provide a better taxation scenario for that group of people than for locals who remained here.

      Anyone considering retiring here should mark taxation in the ‘con’ column and there’s probably more opportunity for the situation to get worse rather than better. If nothing else there is plenty of evidence that the attempts to collect tax are increasing as reducing tax evasion is one of, if not the number one objective, of the Colombians at the present time. They went after Colombians who had money offshore in Panama and the fines were impressive.

      ‘Lots of money’ can also be misleading. There are many retirees these days with assets (including retirement accounts) or the potential to inherit assets that will cross that ‘lots of money’ threshold.

  9. Hi John,great article, Laureles is one of the nicest areas to live in the city,and I agree in all your comments about the nice weather the great public transportation (best in Latin America according to newspaper El Pais in Spain just 3 days ago and I add better than any US city too),warm and friendly people,excellent variety of restaurants, supermarkets,malls and attractions that make me choose Medellin my home since July 2015. I also traveled worldwide to more than 25 countries, my first time to Colombia was in 1992 to Cali and last year I visited Manizales, Pereira, Armenia, Ibaguue, Bogota, Cartagena, Barranquilla and Santa Marta.

    I am not rich. I save money for early retirement and now Colombia is my home. A decision that I will never regret. I talk to many Colombians not from Medellin and they admire Medellin very much, they like to visit and stay here. I read a lot of articles and posts about Medellin but never such a negative and inaccurate as the one that you posted Mr. Ronal Davis. You are spreading here total misinformation to the readers,and I am glad that Jeff rebuked many of your wrong statements about this city. Probably you are a very frustrated person living here that probably didn’t speak any word in Spanish or make any effort to learn,then you are in the wrong place. The JMC airport in Rio Negro is open 24/7,the US is only 3 hours away and for your knowledge Medellin was ranked just last week Second best place in the world from expats to retire.Beside this Colombia minimum salary is 737,717 Colombian pesos a month plus an additional 83,140 cops for transportation health,that means 820,857 a month much more than the $8 that you said daily,also only about 1.5 million people receive the minimum salary in Colombia,and as President Santos state more than 60% of the population are middle class now. I lived in Sabaneta south Medellin and I never felt any contaminated air at all,only in the Centro sometimes and your picture of Medellin is way back in the 90s when yes Medellin was not a safe place to live,but now I work everywhere in Medellin and I feel safe,of course you have to take precautions and use common sense,this is my opinion and many expats living here will agree with me,I love this city and his people,and also the posts of Dave,Jeff and other bloggers that post very accurate,useful and exact information about this beautiful city.

    • Is Ronal that wrong? On your own numbers Mario (including the health number) and using the current exchange rate that’s still around $8-9 a day. I’m not sure on your stastic that only 1.5 million earn the minimum salary, but it’s no secret that many earn less than that number (the lady selling chiclets has no minimum guarantee). As for 60% being middle class I doubt many Colombians would agree that. Whatever, it doesn’t equate to a western middle class definition.

      On pollution I find it amazing that there’s a recognition of how bad the situation is becoming. I have contacts in the health care world and they aren’t happy with the situation. Most sunny days you can see the haze hanging in the valley. What is noticeable is how much the situation has detiorated in the past couple of years, along with the traffic. If it doesn’t get worse I suppose that it is tolerable, the issue will be continued detoriation.

      Pollution is not going to be easy to fix. No doubt pica place will be expanded but a large part of the problem is the old buses and trucks that pump visible pollution into the air (and also contribute to noise pollution). Getting those off the road is a much bigger problem and will take time.

      On the comment about JMC technically is open 24 hours but during the night it’s effectively cargo operation. It’s a good airport but it if dwarfed by El Dorado in Bogota in terms of connectivity and flight schedules. JMC is also going to limited by the single runway – which incidentally is in urgent need of work.

      So Medellin and Colombia are great places to live. But suggesting to expats thinking of moving here that pollution isn’t an issue or that a very large portion of the population survives on extremely low income might not be useful.

      • Yes Ronel is wrong. Nobody works 30 days a month so you can’t divide by 30 to figure out how much you earn per day worked. If you work Monday-Saturday for four weeks per month on average that is earning $11.51 per day that you work using Mario’s numbers at today’s exchange rate. If instead work Monday-Friday that is even more per hour – nearly $14 per day.

        JMC is the second largest airport in Colombia with more flights than any airport but El Dorado in Bogotá.

        • OK Kate – so how many days do people work. Most work 6 days a week here. And you can divide the amount earned by 30 if you want to understand how much people have to live on a day. People still spend money on the days they are not working. Even if it’s $8 or $11 a day that’s not necessarily to support a person – that can be to support a family. Including the healthcare amount doesn’t increase disposable income – it can’t be used to buy beans and rice. As Ronel says we ex-pats have a rather privileged and in some cases ‘bubble’ situation.

          Wages here – by any standard – are low. If you want to talk away from the minimum wage do you know doctors who make COP 3 million ($1,000) a month – I certainly do. Compare that with salaries for doctors elsewhere.

          Understanding the level of income here is a key factor for people looking to relocate here and in particular those who are considering investing in property. Property prices may seem reasonable but come the time to sell there’s a limited amount of people who can afford to buy the place from you (unless you find another foreigner). Rentals to locals also have some pretty hard ceilings on what can be charged.

          Yes JMC is the second largest airport in Colombia. El Dorado Bogota is the largest and has something in the region of 36 million passengers a year. JMC is more like 7 million a year – it’s a big difference. Bogota also has the capacity – with recent rebuilding to grow considerably faster than JMC. And the truth is – although there are an increasing number of destinations that you can fly to directly from JMC in many cases it’s a single flight a day (so there’s no price competition) and there are still lots of places that are missing. For example Madrid is the only European destination.

          Saying that JMC is smaller than EL Dorado isn’t denigrating it. But there are some realities out there including the limited space to expand the airport and the only approach being between the two hills which limits any ability to expand traffic significantly.

          • True that minimum wage can’t support a family – that’s why most Colombians I have met have multiple wage earners per household.

            Also keep in mind that 45% of Colombians in Medellín live in estrato 1 or 2 that have much lower costs of living than estratos 4-6 where most expats tend to live. For example, I know one family that is paying only 200,000 pesos per month for rent in an estrato 2 neighborhood for their small 2-bedroom place and they have subsidized utilities that are very cheap.

            And regarding wages in Colombia – they are low throughout Latin America in comparison to the U.S. How about comparing to other countries in Latin America, which would be a more fair comparison. For example, in Brazil the largest country in Latin America which is wealthier than Colombia, the 2017 minimum wage is 937 reales – which is only $297 per month or 887,657 Colombian pesos per month – so similar to Colombia’s low minimum wage.

          • I’m not sure what you are arguing Jeff. My comments were that Ronel wasn’t that incorrect in talking about wages, his numbers weren’t materially wrong. I’m not quite sure of the value of comparing minimum wages across LATAM. Personally I’ve worked in Colombia, Mexico, Argentina, Brazil, Ecuador, Chile and (some time ago) Venezuela. In some of the countries – like Argentina and Brazil – there have been times of boom and bust. It’s not so long ago that it seemed as if every second tourist in NYC came from Brazil. That’s not true at the present time. Exchange rate fluctuations provide a lot of noise in the data. But yes, all have large percentages of the population living on low wages.

            Yes costs are cheaper in E1-2 but inflation costs, in particular on food stuffs are creating significant hardship. Colombia has high inflation (last year around 8%) and that tends to be particularly hard on those at the bottom of the income ladder.

            But the earning capacity of the families in the other estratos is also limited. What about my example of doctors salaries? Or the tech people working for the big companies again on around COP 2.5-3 million a month?

            It doesn’t change my point that a potential expat looking at a COP 400 million apartment thinks that it’s a real deal and yet in reality the number of locals who could ever buy it from him in the future isn’t a huge pool. Have you ever come across ex-pats who can’t resell their ‘investment property’ – at least without taking a loss on it?

            There is a growing professional middle class. But they are also encountering the headwinds that their peers in other countries are experiencing. Cut backs and reductions in staff and (what for me is ridiculous) some of the big companies here outsourcing work to countries like India.

            And the minimum wage, as I’ve said is not the minimum. I’ve not got current data but the size of the population who work informally and therefore don’t qualify for the minimum wage runs into the millions. I’ve seen estimates that up to 42% earn less than the minimum wage. I’ve not ability to prove that (and it’s probably even difficult for the Colombians to measure it themselves) – and it’s probably true in other Latam economies, but it is rather eye opening.

            Lastly, as you may have noticed – for the first time in a while unemployment is starting to grow again.

          • I’m not arguing. I’m pointing out things with sometimes a different opinion and backing up what I say with observations and usually statistics.

            Inflation last year wasn’t 8% in Colombia – it was actually 5.75%. See: http://colombiareports.com/colombias-2016-inflation-rate-5-75-misses-government-target/.

            The government in Colombia increased the minimum wage 7% in 2017 to compensate.

            True there is a substantial informal labor market in Colombia as there is in many other countries in Latin America and yes that is eye-opening. Here’s a paper about this for Colombia with lots of statistics: http://www.repository.fedesarrollo.org.co/bitstream/11445/3304/3/WP_2016_No_73.pdf. As I said in my comment above, Colombia households tend to have multiple wage earners to compensate. I’ve seen this in over 100 Colombia families I have meet in my 10+ years traveling to and living in Colombia. I have also seen this in many other countries in Latin America.

          • That number on Colombia reports (I never consider it a reliable source) doesn’t match other data. It certainly had dropped, on an annualized basis to those levels at the very end of 2016 but in Q1 the rate was at or above 8% and stayed at or above 7% through until October (source tradingeconomics.com). Food price inflation (key to the discussions we were having) up until September was running at 10% down from 13% in August. Last July at just under 9% inflation was growing at the fastest rate in 16 years (Bloomberg).
            The reason there has been such a drop in inflation is a) the end of El Niño which was causing much of the food inflation and b) the impact of imported goods passing into the economy with the earlier drop in the Peso.
            The Peso has started to fall again recently and probably enough to keep the current inflation rate at least towards the higher end of 5%.

          • The 5.75% inflation rate I quoted is the official number that you can find in many other sources (DANE, Spanish language news). Colombia Reports said they got their 5.75% inflation number for 2016 from the Colombian Central Bank that got their number from DANE – Colombia’s official statistics agency, which is the agency responsible for tracking inflation in Colombia.

            Here is a a link directly to DANE that reported the 5.75% inflation rate for 2016 if you don’t believe it – see the chart with 6.77% inflation in 2015 and 5.75% inflation in 2016: http://www.dane.gov.co/index.php/52-espanol/noticias/noticias/4026-indice-de-precios-al-consumidor-ipc-ano-2016-y-diciembre-2016 . 5.75% was the official 2016 inflation number for Colombia.

            The 2016 annual inflation rate was heavily reported in all the major Spanish language newspapers as well as all the TV news in Colombia in early January. Perhaps you don’t read or watch those.

            And FYI, annual inflation in Colombia has dropped for seven consecutive months and was 5.18% in February. Colombia’s central bank expects inflation to continue to drop as the exchange rate hasn’t changed that much from last year plus there are less problems with crops that were experienced last year.

          • No I don’t watch the local TV news Jeff, but I do read (among other Colombian newspapers) La Republica daily which as you know is the local financial paper. Perhaps you do the same.

            Think of it this way. The numbers that you are quoting are year on year changes. Therefore it measures the change in the year. So it measures the change from 01 January through 31 December. What that loses is the much higher inflation the occurred during the year. If you look at the monthly graphs inflation was very high for the majority of the year but then as food prices after El Niño decreased it reduced the year on year inflation. So, the vegetables that you picked up in the supermarket in July were more expensive then they were in December. In reality inflation was much higher through the year than the numbers you are quoting, but the year end snap shot benefitted from the falling prices at the end of the year. It’s like looking at the change in the peso over a month and ignoring what the rate was on the days you went to the ATM. At the end of the year prices had changed 5.75% but it is likely that during the year the inflation on your purchases was much more. Economies like Colombia have much more prounced variations in monthly inflation that economies like the US.

            The 5.18 forecast for 2017 is interesting. That will of course not include any adjustment for an El Niño event and given that the expectations are for a relatively stable exchange rate. That suggests that the baseline Colombian inflation rate is considered to be around 5%. So if there is any shift in the assumptions, and the price of oil (and therefore the peso) would be likely suspect, then inflation could easily exceed the 2016 official number.

            Also for ex pats the inflation rate is often higher than the official numbers. Basically that’s because ex pat spending patterns tend to be somewhat different to most locals. Generally we are wealthier and we also tend to buy more imported goods. Those imported goods, the packet of Italian pasta or the tin of Campbell’s soup have their prices driven by the exchange rate. Falling peso, more expensive soup in peso terms.

          • DANE publishes a rolling 12 month inflation number every month. And that number has been dropping every month for the past seven months. That 5.18% inflation number I quoted isn’t a forecast that was the actual annual inflation rate seen in February 2017.

            The Colombian Central Bank expects the trend over the past seven months to continue and inflation to probably drop below 4% by year-end 2017.

            The Central Bank’s target inflation rate is a range of 2-4%, which it was for many years until the major drop in the oil prices and the dramatic change in the exchange rate plus El Niño caused inflation to increase dramatically in 2015 and start to moderate a bit in 2016 and looking to moderate more in 2017.

          • Jeff, of course it’s going to drop. As I said there are some months in the first three quarters of 2016 that have high CPI readings created by El Niño. Rolling 12 month numbers are going to look great until Q4 when the decreased CPI numbers from 12 months before are going to impact the YOY calculations.

            4% inflation at the end of year 2017? Given the the 7% minimum wage increase (and other salaried workers will get similar increases) that has been granted that’s going to be tough. I have a lot of time for the guys at the Central Bank here but a) the lagging increase in wages and b) the potential for peso weakening isn’t going to make it easy.

  10. Patrick Trussell says:

    And , the women are beautiful and charming .I have lived in Cuenca, Ecuador for four years . The traffic and lack of women are the worst parts of Cuenca .

  11. Medellin is cheap.
    People are nice.
    Weather is great.
    Traffic is a problem.
    Pollution is a problem.
    Security is an issue. (It is! don’t kid yourself.)
    Wouldn’t recommend investing in property. Especially if you are living off the rental income alone.

  12. HI everybody,Ijust want to make a correction,the monthly minimum salary in Colombia is 737,717 Colombian pesos,plus a government help for public transportation of 83,140 cop,for a total of 820,857 cops, a month,by mistake typing I said that was for “health” I apologize.The other stament was correct,the airport JMC in Rio Negro,is open 24/7 every day,now is a Jet Blue flight that leaves at 12.26 am to Miami,Florida and many times is delayed,plus some cargo and charter flights arriving late at night,and also for any emergency happening at El Dorado airport in Bogota,like strong winds ,fog,and bad weather that happen there many times,,this flights are redirected mainly to JMC or to Matacana airport in Pereira,so for aviation security travel the airport is open 24/7,but if your flight is cancelled or you would like to arrive early for a morning flight you can wait inside the terminal without any problem.

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