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Colombia Economic Activity April 2024

Colombia: Economic activity expands at the fastest pace in nearly two years in April

Economic activity surged 5.5% year on year in April, which contrasted March’s 1.5% decrease. The print marked the best reading since August 2022 and smashed market expectations. April’s notable turnaround in part reflected a base effect given that Easter holidays fell in March this year but in April of 2023. Agricultural output rebounded and posted the strongest expansion in nearly two years, and industrial activity rose after over a year of declines. Moreover, services sector growth accelerated.

Meanwhile, the trend improved notably, with the annual average growth of economic activity coming in at 0.8%, up from March’s 0.2%.

On a seasonally adjusted monthly basis, economic activity rose 2.0% in April (March: -0.9% mom), the best result since December 2022.

April’s print supports our Consensus’ view that year-on-year economic growth picked up pace in the second quarter from the first. On the expenditure front, our panelists expect fixed investment to have returned to growth, and forecast improvements in government expenditure and exports of goods and services. Still, subdued private spending growth will have limited overall momentum.

Analysts at Scotiabank Economics commented:

“Economic activity seems to be gaining momentum, although it is still too early to say that the positive trend can be maintained throughout the year. Once again, the better-than-expected performance is explained mainly by agriculture and public activities, sectors that have brought volatility instead of a sustainable trend.”

Daniel Velandia and Diego Camacho Alvarez, analysts at Credicorp Capital, added:

“We are maintaining our GDP forecast of 1.8% y/y for this year. Our baseline scenario highlighted that, given the current circumstances, we can only expect a modest recovery of private investment amid elevated political and regulatory uncertainty, along with proposals to change the rules of the game in strategic sectors. The upward surprise in the annual comparison could be attributed to a significant base effect stemming from factors such as measuring activity in a leap year.”

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