Economy grows the most in three years in Q3

GDP growth overshoots market estimates: Colombia's GDP increased 3.6% on a year-on-year basis in Q3, following a 2.1% expansion in the prior quarter. Q3's reading was the strongest since Q3 2022 and exceeded market expectations. On a seasonally adjusted quarter-on-quarter basis, economic output increased 1.2% in Q3, following 0.4% growth in the prior quarter.

Domestic demand fuels Q3’s acceleration: Relative to the previous quarter's data, readings in Q3 improved for private consumption (+4.2% in annual terms vs +3.6% in Q2), government consumption (+14.2% vs +4.5% in Q2), fixed investment (+4.8% vs +2.1% in Q2), exports of goods and services (+2.2% vs -0.7% in Q2) and imports of goods and services (+10.0% vs +9.8% in Q2). Domestic consumption was the main driver of growth. Private spending was bolstered by ongoing job creation, strong real wage growth—exceeding inflation—and robust remittance inflows. Public spending’s acceleration reflected government fiscal stimulus, which boosted the purchases of goods and services and the direct provision of public services. On the external front, despite the rebound in exports, the pickup in imports caused net exports to detract from the GDP reading; import growth was driven by strong domestic demand growth.

GDP growth to remain solid ahead: Our panelists expect annual GDP growth to ease from Q3 levels in the final quarter of 2025. Still, economic growth should remain robust and close to the prior three-quarter average: Ongoing fiscal stimulus, past interest rate cuts, improving consumer confidence and currently tight labor market conditions should bolster economic activity. In 2026 as a whole, Colombia’s economy should expand at the fastest rate in four years and rank among the fastest-growing economies in Latin America. Lower interest rates, a likely more market-friendly government, and China-backed infrastructure projects are set to bolster fixed investment growth. Private consumption should also remain supportive—while slightly decelerating—as it expands at one of the fastest rates in the region, thanks to strong wage growth and declining inflation. May’s presidential elections and Colombia-U.S. relations are key to monitor.

Panelist insight: Commenting on the Q4 outlook, Mauricio Hernández-Monsalve, analyst at BBVA, stated: “Leading indicators also remain favorable. Our big-data gauges of consumption and investment, vehicle sales, household confidence, housing sales, and provisional import data published by DIAN all remain firm. Taken together, they suggest consumption will stay solid, output is recovering, and housing will continue to gain traction. Against this backdrop, […] our GDP projection for 2025 now carries an upward bias. The adjustment reflects not only the strong third-quarter outturn but also the likelihood that part of this momentum will carry into the coming months.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Colombian private consumption projections for the next ten years from a panel of 30 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable private consumption forecast available for Colombian private consumption.

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