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Colombia’S Economy Grows By 0.7% In First Quarter, Falling Short Of Expectations
(MENAFN- The Rio Times) Colombia's Economy grew by 0.7% during the first quarter of 2024, according to the National Administrative Department of Statistics (DANE).
Financial markets had projected a growth rate above 1%, making this result disappointing.
Analysts noted that private investment, a significant growth driver, fell by 25% in 2023. Early 2024 showed only slight improvement, with a decline of 13.4%.
Public administration, defense, education, health, and social services significantly contributed to economic growth.
This sector increased by 5.3%, adding 0.7 percentage points to the annual variation. The agriculture, livestock, forestry, and fishing sectors grew by 5.5%, contributing 0.5 percentage points.
The utilities sector, including electricity, gas, water supply, and waste management, grew by 4.5%, adding 0.2 percentage points to annual growth.
Cyclone Yaku severely impacted the economy , causing floods and landslides that disrupted transportation.
This natural disaster compounded existing economic difficulties, reflecting a broader struggle for economic stability.
Mauricio Hernández-Monsalve, an economist at BBVA Research, highlighted that internal demand fell by 0.1% annually and 0.6% quarterly.
This decline marked the second consecutive quarterly decrease. He attributed this to a decrease in fixed investment and inventory depletion.
Private consumption showed mixed results. Services and non-durable goods were positive, but durable and semi-durable goods were negative.
Optimistic Growth Projection
Despite these challenges, the Central Bank of Colombia remains optimistic, projecting overall growth of 3% for the year.
The bank expects higher copper prices to support this expansion, given Colombia's role as a major global producer.
Early indicators, such as increased electricity production and public investment, suggest improved internal demand and private consumption in April.
Inflation remains a concern, but the Central Bank aims to keep it within target ranges. BBVA Research forecasts inflation to end the year at around 2.6%, with further reductions anticipated in 2025.
Political instability, high global interest rates, and potential climate impacts add uncertainty to Colombia's economic outlook.
Nonetheless, signs of recovery provide a cautiously optimistic view for the future. The overall sentiment is that, while challenges remain, there is potential for gradual improvement.
Financial markets had projected a growth rate above 1%, making this result disappointing.
Analysts noted that private investment, a significant growth driver, fell by 25% in 2023. Early 2024 showed only slight improvement, with a decline of 13.4%.
Public administration, defense, education, health, and social services significantly contributed to economic growth.
This sector increased by 5.3%, adding 0.7 percentage points to the annual variation. The agriculture, livestock, forestry, and fishing sectors grew by 5.5%, contributing 0.5 percentage points.
The utilities sector, including electricity, gas, water supply, and waste management, grew by 4.5%, adding 0.2 percentage points to annual growth.
Cyclone Yaku severely impacted the economy , causing floods and landslides that disrupted transportation.
This natural disaster compounded existing economic difficulties, reflecting a broader struggle for economic stability.
Mauricio Hernández-Monsalve, an economist at BBVA Research, highlighted that internal demand fell by 0.1% annually and 0.6% quarterly.
This decline marked the second consecutive quarterly decrease. He attributed this to a decrease in fixed investment and inventory depletion.
Private consumption showed mixed results. Services and non-durable goods were positive, but durable and semi-durable goods were negative.
Optimistic Growth Projection
Despite these challenges, the Central Bank of Colombia remains optimistic, projecting overall growth of 3% for the year.
The bank expects higher copper prices to support this expansion, given Colombia's role as a major global producer.
Early indicators, such as increased electricity production and public investment, suggest improved internal demand and private consumption in April.
Inflation remains a concern, but the Central Bank aims to keep it within target ranges. BBVA Research forecasts inflation to end the year at around 2.6%, with further reductions anticipated in 2025.
Political instability, high global interest rates, and potential climate impacts add uncertainty to Colombia's economic outlook.
Nonetheless, signs of recovery provide a cautiously optimistic view for the future. The overall sentiment is that, while challenges remain, there is potential for gradual improvement.

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