Colombia’s Economy Only Grew 2% in the Second Quarter

Colombia’s statistical agency has released its second quarter data, showing a 2.0% year-over-year growth rate — more bad news for the nation’s economy. This is below the 2.3% year-over-year GDP growth rate from the first quarter of 2016 and well below the 3.0% figure in the second quarter of 2015. In fact, according to Bancolombia, the nation’s largest bank, this is the worst second quarter rate seen in Colombia since 2009.

The 2.0% figure is also below the projections of most analysts in what is shaping up to be an even worse year than expected. The central bank’s lofty forecast was for 2.6%. Bancolombia was expecting 2.4%. And the average analyst outlook, among those polled by Bloomberg, had been 2.3%.

The poor showing further strains the chances that overall annual growth in 2016 will meet current forecasts. And this comes after the central bank already revised its estimate downward in July, from 2.5% to 2.3%, with a possible range of between 1.5% and 3.0%. “These forecasts imply a domestic demand that continues to adjust, partly as a response to the deterioration in the dynamics of national income,” said the Banco de la República in a statement in late July.

Colombia GDP by Quarter (prices constant from 2005)

Image: Departamento Administrativo Nacional de Estadística (DANE)

The raw quarterly growth rate was 0.2%. This was equal to the 0.2% from the first quarter of this year but paled in comparison to 0.7% posted in the second quarter of 2015.

“With this result, the slowing trend in activity the country’s been experiencing is confirmed,” said Bancolombia in a statement.

The National Administrative Department of Statistics (DANE) report does include some good numbers, however. The industrial manufacturing sector grew 6.0%, financial services and real estate jumped 4.6%, and the social, community, and personal services segment increased 2.3%. The manufacturing results were particularly encouraging, with 19 of the 20 subsections that make up the grouping showing growth.

Overall, “six of the nine branches grew positively and three of these were above the growth of the economy,” said Mauricio Perfetti del Corral, the director of DANE.

The big outlier was the same thing that has been dragging down the Colombian economy for two years now: oil. Petroleum and natural gas extraction plummeted by -11.0%, pulling down results in the larger mining segment by a total of -7.1%. This was much worse than the -4.1% number from the first quarter this year and light-years below the positive 4.4% growth seen in the second quarter of 2016.

The other two negative segments were electricity, gas, and water — which fell by 1.1% — and agriculture, which came in at a negative at 0.1%. DANE attributed to fall in agriculture to “climatic factors.”