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Economy
strengthening.
In the third quarter GDP grew by 3.1% over the same
quarter last year. The
National Statistical Department (DANE) figure came in well below the
preliminary 3.7% growth figure released by the National Planning
Department in October and is also below the growth rate registered in the
second quarter (+ 3.5% year-over-year).
The slowdown over the previous quarter is mainly due to a marked
slump in agriculture and a steep contraction in mining.
Most of the other sectors, however, continue on a favourable
recovery path from last year’s recession.
The government expects growth to again exceed 3% in the fourth
quarter and sees growth for the whole year at 3.1%.
The manufacturing industry was the key driver behind the third quarter
expansion, registering 12.6% growth over the same quarter last year.
Growth in the manufacturing industry increased for the third
consecutive quarter (Q1: + 8.8% year-over-year; Q2: + 11.7%) as the sector
recovers from the 12.4% recession in 1999.
Similarly, growth in the retail sector picked up from 6.2% in Q2 to
7.4% in the third quarter, while transport expanded by 4.1% after 3.9% in
the second quarter. The construction sector also appears to have recovered from a
two-year recession. DANE data
indicate that growth consolidated in the third quarter with the expansion
reaching 3.1%, up from 1.3% growth in the second quarter.
The recovery in the construction sector is likely to help drive
down the current high unemployment levels (20.5% in Q3), which still
remain well above regional averages.
Consumption
picking up. The
third quarter DANE growth figures did not yet include consumption data.
However, the most recent data from DANE indicate that consumption
is also on the path to recovery. In
the first nine months of the year, retail sales increased 5.1% (+ 6.3%
excluding fuels and automobile sales) over the same period in September
1999. Growth in household
appliance goods and beverages reached 12.9% and 10.8% respectively for the
same period, while automobile and motorcycle sales experienced the
strongest contraction at 13.5%. Furthermore,
consumer goods imports were up 8.3% in the first nine months, when
compared to the same period last year, driven primarily by strong 29.9%
growth in durable consumer good imports.
The government expects retail sales to rise by approximately 5%
this year. The favourable
development in consumption is echoed in the most recent survey of the
National Retailers Federation (FENALCO), which indicates that business
confidence in the retail sector improved in the third quarter.
The share of businesses that claimed sales to have increased over
the same month last year rose from 40% in August to 43% in September.
Additionally, 58% of the retailers were optimistic that sales would
improve in the next six months, which was up from 55% in August.
Finally, while 72% of businesses surveyed identified low domestic
demand as their principal concern, the same figure has dropped to 45% this
year.
Industry
continues to push recovery.
Industry remains a strong
force behind the current improvement in economic performance, according to
the National Industrial Association (ANDI).
ANDI reports that in the period from January to October, industrial
production grew by 8.9% compared to the same period last year. Most of the key sectors registered double-digit growth with
transport equipment, textiles and steel output performing particularly
well. The healthy recovery of
the industry continues to be driven by a favourable external environment
for Colombian exports, which were up 18.0% in September over the same
month last year. Moreover,
ANDI is confident that the industry will proceed along a strong growth
path, expanding 9.5% next year.
Even though the slowdown in the GDP growth rate of the overall economy
suggests that the momentum in the recovery from last year’s recession is
slowing, the sectoral breakdown indicates that most sectors remain on a
favourable growth trajectory. The
recuperation in the construction industry should help to lower
unemployment and assist the incipient consumption recovery.
As a result,
panellists
maintained their growth forecast this month.
However, despite increased optimism, the economic outlook for next
year dropped from last month and is currently below the government
forecast of 4.0%.
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