Colombia Central Bank Forecasts 2013 GDP Growth of 2%-5%
Colombia’s central bank sees a slower and more uncertain rate of economic growth next year, as European debt turmoil creates a volatile market for the country’s oil, coal, coffee, gold and nickel exports.
The economy will grow 2 percent to 5 percent in 2013, compared to a forecast of 3 percent to 5 percent this year, central bank chief Jose Dario Uribe said in a speech in Bogota yesterday. The Colombian economy’s long-term potential growth rate is between 4 percent and 5 percent, he added.
“In the second quarter, the euro area is contracting and growth in the U.S. remains weak,” Uribe said in a speech in Bogota. The global slowdown has “restricted the growth of the Colombian economy through lower external demand and lower prices for its principal exports,” he said.
The central bank last week cut interest rates for the first time since 2010 after policy makers were surprised by the economy’s loss of momentum amid the world downturn. Traders expect at least one more interest rate cut over the next three months, trading in interest rate swaps shows.
Inflation could accelerate at the start of next year and peak in the second quarter if the El Nino weather phenomenon causes a temporary spike in food prices, Uribe said. This year, inflation will continue to slow and will end the year close to the 3 percent mid-point of its target range, according to the central bank’s forecasts.
Last week’s quarter-point rate cut, which was forecast by just 11 of 35 analysts surveyed by Bloomberg, pushed borrowing costs to 5 percent. Some board members argued for a half-point cut.
If the interest rate cut leads to an acceleration in consumer credit, either the central bank or the country’s financial watchdog will “take measures,” Uribe said.
Credit expanded 18.3 percent in May from a year earlier, down from year-on-year growth of 22.4 percent in December.
Industrial output fell for a third straight month in May from a year earlier, while year-on-year export growth slowed to 1.2 percent, from 4 percent in April and 16.1 percent in March.
The yield on three-month interest-rate swaps fell 28 basis points, or 0.28 percentage point, to 4.75 percent this week, indicating traders expect an interest rate cut within the next three months.
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