Colombia: Economic recovery picks up in the first quarter
May 22, 2018
According to the latest GDP data released by the National Statistical Institute (DANE) on 22 May, the economy grew 2.2% in the first quarter, picking up from a revised 1.8% figure in the final quarter of 2017 (previously reported: +1.6% year-on-year). A pick-up in private consumption and government spending drove the upturn. Meanwhile, economic growth in seasonally-adjusted, quarter-on-quarter terms rose to 0.7% in Q1, up from 0.5% in Q4. An important note is that this data release has changed the series base to 2015, which means that the overall figure, and thus past growth figures, have been revised under the new methodology.
Overall, domestic demand expanded at a weaker pace in Q1, growing 1.3% year-on-year in the quarter compared to 2.1% in Q4. The downturn was due to a sharp contraction in fixed investment, which offset accelerations in both private consumption and government spending. Fixed investment fell 3.9% in the quarter after rising 0.6% in Q4. On the other hand, household consumption grew 2.5% in annual terms amid lower level of inflation, following an expansion of 1.7% in Q4. Government consumption soared 7.3% in the first quarter, up from 4.8% in the previous quarter.
While exports contracted again in the first quarter, they did so at a softer pace. Exports fell 0.5% in Q1, following a more sizeable contraction of 3.7% in Q4. Imports also fell, with the rate of decline moderating as well. In Q1, imports dropped 1.7% after contracting 3.8% in the previous quarter. The overall contribution of the external sector to growth was positive, as imports contracted more sharply than exports.
While the economic recovery is underway and is expected to strengthen on the back of higher oil prices in the coming quarters, a high fiscal deficit continues to pose risks to long-term fiscal sustainability.