The Colombian economy grew by 2.2%, year-over-year, in the first quarter of 2018, according to the National Administrative Department of Statistics (DANE).
Moreover, this figure represents an uptick from the meager 1.8% full-year growth in the nation’s gross domestic product (GDP) in 2017, and it is well above the 1.3% growth in the first quarter of 2017. This was also above the 1.6% growth seen in the fourth quarter of 2017.
In its analysis of the results, Bancolombia cited various factors as “key variables for the performance of the economy: the slowdown of inflation, the reduction in interest rates, the recovery in consumer and business confidence, the rebound in oil prices, and the greater room for maneuver from public spending.”
With 6.1% growth, the financial services sector, including insurance, was the best-performing economic segment measured by DANE. Public spending, up by 5.9% from the first quarter of 2017, was the next largest factor, with retail also coming in strong at 3.9% growth. The oil and natural gas sector showed marginal growth, increasing by 0.8%.
Poor performance from construction, which retracted by 8.2% compared to the same quarter in 2017, and mining (down 3.6%) were the biggest weights holding back growth. Manufacturing also fell by 1.2%.
When it comes to construction and mining, London-based research group Capital Economics sees a turnaround coming. “We expect the contraction in both sectors to ease over the coming quarters for two reasons,” stated the organization in a note to investors. “First, higher oil prices should provide a boost to mining investment. Second, the recent slump in the property market seems to have passed its trough. House prices have returned to growth in recent months, and that should translate into improved construction investment over the next year.”
Forecasts for the nation’s full-year GDP growth in 2018 have varied considerably thus far in the year, in part due to uncertainty regarding this month’s presidential election, which will put a new head of state in office, and general global conditions.
Still, most leading predictions expect a recovery this year following two straight years of slow growth that dipped below 2%, a threshold that hadn’t been crossed seen since height of the global recession in 2009.
Bogotá economic research group ANIF has predicted growth of 2.3% this year, while the Colombia central bank has forecase 2.7% expansion. Bancolombia sits in the middle at 2.5%.
Several other institutions outside the country have tended more toward the optimistic side. The World Bank forecasted 2.9% growth earlier this year, the International Monetary Fund (IMF) is now forecasting 2.7% (down from a start-of-year prediction of 3.0%), and Capital Economics foresees an above-consensus 3.0%.