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Colombia Economic Activity February 2024

Colombia: Economic activity growth hits one-year high in February

Economic activity rose 2.5% in February compared to the same month of the previous year, which was above January’s 1.9% increase. February’s figure marked the best reading in a year and smashed market expectations. Looking at the details of the release, the upturn chiefly reflected a stronger increase in services sector output, while the industrial sector contracted at a milder pace. Less positively, agriculture production growth softened in February.

That said, the trend pointed down, with annual average economic activity growth coming in at 0.4%, down from January’s 0.5% reading. On a seasonally adjusted monthly basis, economic activity fell 1.6% in February (January: +3.3% s.a. mom), the worst result since November 2022.

Despite starting 2024 on a stronger footing, our Consensus is for the economy to have broadly flatlined on an annual basis in Q1. That said, the economy is expected to regain momentum through Q4 and post a faster annual expansion overall in 2024 compared to 2023, partly aided by a low base of comparison.

Goldman Sachs’ Santiago Tellez commented on the outlook:

“We continue to expect below-trend real growth on the back of tight domestic financial conditions, still elevated inflation eroding households’ disposable income, and a soft credit cycle. Elevated policy uncertainty given the administration’s aggressive agenda and mounting executive actions weighing on key sectors, together with weak business sentiment, are likely to impinge further on private investment.”

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