Colombia: GDP growth improves in Q1
GDP growth sped up to 3.0% year on year in the first quarter, from 2.2% in the fourth quarter of last year.
Household spending rose 2.9% in Q1, marking the weakest expansion since Q1 2021 (Q4 2022: +3.9% yoy). Public consumption flatlined in Q1 (Q4 2022: -6.3% yoy). Meanwhile, fixed investment contracted 1.0% in Q1, marking the worst reading since Q4 2020 (Q4 2022: +8.0% yoy).
On the external front, exports of goods and services rebounded, growing 4.9% in Q1 (Q4 2022: -0.9% yoy). Conversely, imports of goods and services deteriorated, contracting 7.4% in Q1 (Q4 2022: +7.5% yoy), marking the worst performance in over two years.
On a seasonally adjusted quarter-on-quarter basis, economic growth accelerated to 1.4% in Q1, following the previous quarter’s 0.4% increase. Q1’s reading marked the best result since Q4 2021.
Soaring inflation and interest rates knocked consumer spending in Q1, and political uncertainty may have hurt investment. That said, public spending stabilizing and exports rebounding ensured that GDP growth picked up in Q1. Turning to Q2, our panelists expect economic growth to slow more sharply, with private spending continuing to be hurt by elevated inflation and interest rates.
Analysts at Goldman Sachs said:
“Going forward, we expect economic activity to moderate on the back of high inflation, tighter financial conditions, and a weaker impulse from external activity. Moreover, heightened policy uncertainty due to ambitious policy reforms already approved and a heavy legislative agenda for major social reforms with potential macro impact may weigh further on business sentiment and private investment.”