Analysts had told Reuters they expected Colombia's gross domestic product (GDP) would expand in the quarter by 2.8% year on year, led by soaring domestic demand.
Colombia's central bank had predicted growth of 3%. "There was an increase in consumption by Colombian households, a reduction of overall consumption of the general government, and a decline in the gross formation of capital," DANE director Piedad Urdinola said. Growth between January and March was driven by the finance and insurance sector, which expanded by 22.8% and artistic activities, which grew 18.7%. The mining sector registered 3.6% growth, while the real estate sector expanded by 1.9%. Colombia's construction sector contracted by 3.1%, the government said. The economy expanded 1.4% in the first quarter versus the fourth quarter of 2022, DANE said. DANE lowered its GDP growth for January and February down to 4.8% and 2.4% respectively. In March, the economy expanded by 1.6%. It also revised its 2022 economic growth figure to 7.3% from 7.5%.
Investment in the Andean country contracted by 10.3% in the first quarter, DANE said, causing concern among some analysts.
"The data shows a fairly significant contraction in investment that is already beginning to materialize," said Maria Alejandra Martinez, director of economic research at brokerage Acciones & Valores. This was due to "very high interest rates, high general inflation, currency depreciation, rising commodity prices and political noise," she added.
The technical team of Colombia's central bank forecasts GDP
growth for this year at 1%.
The bank's board has raised its benchmark interest rate to
13.25%, its highest in decades, in efforts to tame inflation.
Twelve-month consumer price growth through April hit 12.82%.
($1 = 4,564.44 Colombian pesos)
(Reporting by Nelson Bocanegra and Carlos Vargas; Writing by
Oliver Griffin; Editing by Marguerita Choy and Alexander Smith)
