- 2Q growth led by 8.7% expansion in construction sector
- Growth outpacing most other major Latin American economies
Colombia’s economy expanded more than expected in the second quarter, as a boom in the construction industry prevented a deeper slowdown in the broader economy amid falling commodities prices.
Gross domestic product expanded 3 percent from a year earlier, compared with 2.8 percent in the first three months of the year, the national statistics agency said Thursday. The median forecast of 29 analysts surveyed by Bloomberg was for expansion of 2.9 percent. From the previous quarter, GDP grew 0.6 percent.
Some policy makers voted for an interest rate increase at the central bank’s last two board meetings to curb the fastest inflation in more than six years, even as economic growth slowed. The second-quarter figures may convince more board members for the need to raise borrowing costs, said Sergio Olarte, an economist at BTG Pactual. The bank has left its policy rate unchanged at 4.5 percent for the past year.
The figures “provide arguments for a rate increase,” Olarte said by telephone from Bogota. He expects Banco de la Republica to raise its key lending rate at its Sept. 25 meeting by a quarter-percentage point to 4.75 percent and another move to 5 percent in October.
Yields on Colombia’s benchmark peso bonds due 2024 fell 0.02 percentage point to 7.98 percent at 10:46 a.m. in Bogota, according to central bank data. The peso jumped 1.8 percent to 3,059.52 per dollar amid higher oil prices.
The economy is on track for its slowest expansion since 2009 this year after prices fell for its oil, coal, coffee and gold. Still, construction output rose 8.7 percent in the second quarter from a year earlier, while mining expanded 4.2 percent and agriculture 2.5 percent. Manufacturing output contracted 1.3 percent.
Finance Minister Mauricio Cardenas has said repeatedly that industry and agriculture will get a boost from the 23 percent depreciation of the peso over the past year, helping to revive growth and offset reduced oil exports.
Second-quarter growth outpaced most of the other major economies in the region, including Mexico, Chile and Brazil, and equaled Peru’s 3 percent expansion.
Annual inflation accelerated to 4.74 percent in August, the fastest pace since 2009, as the weaker peso triggered a surge in the price of imported goods.