Colombia’s economic growth slowed in the first quarter as industry contracted and coal output slumped following a strike in the country’s largest mine.
Gross domestic product expanded 2.8 percent from the year earlier, the national statistics agency said today in Bogota, lower than the 3 percent growth forecast by the Finance Ministry. The median forecast of 29 economists surveyed by Bloomberg was for 2.7 percent growth. The economy expanded 0.3 percent from the previous quarter.
President Juan Manuel Santos announced in April a 5 trillion peso ($2.6 billion) stimulus package aimed at “reactivating” the industrial sector and boosting growth by 0.7 percentage point this year. The central bank has also cut its policy rate by 2 percentage points over the past year to the lowest in the region, in an attempt to bolster an economy that has seen growth slow in five of the past six quarters.
Colombia’s first quarter growth compared with 4.8 percent expansion in Peru, 4.1 percent in Chile and 0.8 percent in Mexico.
Annual inflation slowed to 2 percent last month, at the lower end of the central bank’s target range. Two measures of core inflation, which aim to track underlying trends by excluding the most volatile prices, slowed to record lows.
Central bank co-director Juan Pablo Zarate said in a June 13 interview that low inflation and below-potential GDP growth give the central bank a “large space” for expansionary monetary policy. Colombia targets inflation of 3 percent, plus or minus one percentage point.
Finance Minister Mauricio Cardenas said June 14 that the economy can grow 4.6 percent a year without overheating, down from a previous estimate of 4.8 percent.
Banco de la Republica will hold its policy rate at 3.25 percent until the end of the year, then raise it to 3.75 percent in the first quarter of 2014, according to the most recent central bank survey of analysts.
Coal output fell 21 percent from a year earlier, after workers at Cerrejon, the country’s biggest coal mine, went on strike for more than a month in a pay dispute, Colombia’s second-biggest coal producer, Drummond Co., had its loading license suspended after a sinking barge dumped coal into the sea. Coal is Colombia’s biggest export after oil.