Economy on good track.  According to preliminary data, released by the National Planning Department (DNP), the Colombian economy grew by 3.7% in the third quarter over the same quarter last year.  The DNP anticipates the positive growth trajectory to continue through the end of the year, with growth again exceeding 3% in the fourth quarter and 2000 GDP growth reaching 3.1%, a substantial improvement from the 4.3% contraction experienced in 1999.

Manufacturing industry continued to outperform other sectors at 11.7% over the same quarter in 1999.  The retail, transport and energy sectors also exhibited improvement over last year, growing 6.2%, 4.7% and 2.5% respectively.  On the downside, the construction and banking sectors remained depressed.  The ongoing slump in the labour-intensive construction sector is likely to maintain the unemployment level at the current highs (20.5% in Q3), the highest rate in Latin America.

The most recent data releases from the National Statistical Office (DANE) confirm the improvement in third quarter economic activity.  According to DANE figures, industrial production is on a strong path to recovery from last year's 13.6% contraction.  In August, industrial production expanded by 15.8% compared to the same month last year - the highest growth rate experienced since March 1998.  Production of transport equipment grew by 67.6% over August 1999, while growth in textile, clothing and paper production reached 20.5%, 24.1% and 35.2% respectively.  Virtually all other sectors experienced double-digit growth with the exception of food and beverages.  The healthy recovery of the industry continues to be driven by a favourable external environment for Colombian exports, which were up 23.4% in August over the same month last year. 

According to the National Industrial Association (ANDI), industrial production rose a further 8.7% in September year-over-year.  Mechanical equipment and textile output were key drivers behind the strong expansion in September. 

Despite the high unemployment, consumption also is experiencing a recovery.  In the first eight months of the year, retail sales increased 2.9% (+3.9% excluding fuels and automobile sales) over August 1999.  Growth in sales of office furniture/equipment and household appliances reached 22.8% and 20.4% respectively for the same period, while automobile sales experienced the strongest contraction at 15.3%.  The favourable consumption data is echoed in the most recent survey of the National Retailers Federation (FENALCO), which indicates that business confidence in the retail sector continued to improve in the third quarter.  While in August of last year 72% of the businesses blamed the slump in sales on low demand, in August the same figure fell to 45%.  Additionally, 58% of the retailers were optimistic that sales would improve in the next six months.

Confidence in inflation containment.  Price pressures remain absent despite the rebound in economic activity.  Consumer prices increased 0.15% in October over the previous month, which brought down annual inflation from 9.2% in September to 9.0% in October, below the 10% Central Bank target for this year.  Transportation costs accounted for the largest share of the price increase due to rising gasoline prices, while food prices spiked as a result of the end of the harvest season, which is tightening supply. 

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