Colombia's Growth Accelerates for Second Straight Quarterby
Expansion outpacing other major Latin American economies
Central bank has been raising rates to rein in inflation
Colombia’s economy expanded for a second straight quarter as strong domestic demand helped offset a fall in oil and mining output, paving the way for the central bank to continue raising rates to curb above-target inflation.
Gross domestic product expanded 3.2 percent from a year earlier, compared with 3 percent in the second quarter, the national statistics agency said Thursday. The median forecast of 25 analysts surveyed by Bloomberg was for expansion of 3.3 percent. From the previous quarter, GDP grew 1.2 percent.
The central bank increased borrowing costs at its last three meetings, saying that the risk of a sharp slowdown had decreased while inflationary pressures had increased. The bank will raise its policy rate another quarter percentage point, to 5.75 percent, at its Dec. 18 meeting, according to the median forecast in a Bloomberg survey of analysts.
“For the moment, the deceleration has moderated,” said Juan David Ballen, a strategist at Casa de Bolsa, the brokerage firm of Colombia’s biggest banking group. “The persistent inflation shocks we have put pressure on the central bank to continue raising rates.”
Consumer prices increased 6.4 percent in November from a year earlier, the fastest pace in more than six years. A slump in the peso has boosted import costs and a severe drought caused food prices to jump.
Despite falling prices for its oil, coal, coffee and gold, Colombia’s economy is out-pacing other major economies in the region. Third-quarter growth compares to 2.9 percent in Peru, 2.6 percent in Mexico and 2.2 percent in Chile, while Brazil’s economy endures its deepest contraction in a quarter century.
Finance Minister Mauricio Cardenas has said repeatedly that industry, agriculture and tourism will get a boost from this year’s depreciation of the peso, helping to provide new sources of growth as oil prices drop. The currency has weakened 27 percent in 2015, the most after the Brazilian real among major emerging-market currencies.