Colombia: Economic activity growth slows in August
Latest reading: Economic activity lost momentum in August, expanding 2.0% year on year (July: +3.8% yoy) and beating market expectations. Looking at the details of the release, August’s slowdown was broad-based, with the agricultural and services sectors rising at a slower pace, and the industrial sector swinging into contraction.
As a result, the trend improved, with annual average growth in economic activity coming in at 1.3% in August, up from July’s 1.1%.
On a seasonally adjusted monthly basis, economic activity returned to the doldrums, declining 0.5% in August (July: +2.5% s.a. mom).
Panelist insight: Santiago Tellez, analyst at Goldman Sachs, commented:
“We expect positive but below-trend real growth in upcoming quarters. Tight domestic and external financial conditions, above-historical norm policy uncertainty, and elevated corporate tax burden will continue to bear on growth. These headwinds are likely to be mitigated by robust workers’ remittances and gradually recovering household disposable income, owing to generous minimum wage policies.”
Analysts at Itaú Unibanco said:
“We expect the economy to grow 1.8% this year (0.6% in 2023), and 2.4% next year. Activity is advancing in line with the central bank’s scenario, while inflation continues to fall and global financial conditions ease.”