slows more than expected in third quarter
the third quarter, gross domestic product (GDP) expanded 2.4% over the
same quarter last year.
The third quarter reading was well below the 4.3% expansion
observed in the prior quarter and was also less than the 3.8% expansion
expected by Consensus Forecast participants.
A quarter-on-quarter comparison confirms the slowdown, as economic
activity actually dropped 0.14% in seasonally adjusted terms over the
second quarter compared to a 0.79% expansion observed the previous quarter.
remains backbone of activity
construction sector maintained its resilience in the third quarter, as
activity rose 7.7% over the same quarter last year.
construction was the key driver behind the third quarter growth, as
activity expanded 31.4% over the same quarter last year. However, a
notable 28.6% decline in civil works projects held back the sector from a
more pronounced expansion. Similarly, activity in the financial
sector rose 5.0% in the third quarter over the same quarter last year.
The robust 20.4% growth pace observed in financial intermediation (Q2 04:
- 19.9% year-on-year) accounted for the strong expansion in the financial
service industry. Manufacturing activity decelerated but still
remained on a strong expansion trajectory with growth reaching 4.8% in the
third quarter. Despite the fact that most sectors – with the
exception of agriculture and mining – remained in positive growth
territory, the third quarter exhibited a clear deceleration in economic
activity. In fact, only public and financial services experienced an
acceleration in economic activity compared to growth figures in the prior
consumption remains strong
National Statistical Department (DANE) is scheduled to release aggregate
demand and supply data later this month.
Nevertheless, retail sales indicate that private consumption is
likely to have remained strong in the third quarter.
In September, real retail sales rose 6.5% over the same month last
The September reading was well ahead of the prior month’s 4.1%
figure and confirmed that the deceleration observed in activity is
unlikely to have been caused by weaker private consumption.
In the second quarter, private consumption growth reached 3.6% over
the same quarter last year.
Strong growth in vehicle (+28.5% yoy) and clothing (+11.1% yoy)
sales boosted activity notably in September.
With the exception of office equipment and print product sales, all
other sub-categories of the retail sector remained in positive growth
sales suggest strong consumption in final quarter
A low interest rate environment, rising real incomes and declining
unemployment are likely to continue to bolster activity in the retail
sector. According to the October survey of the National Retailers
Federación Nacional de Comerciantes), the percentage of businesses
that experienced improved or the same level of sales remained unchanged
over September at 71%. In addition, expectations for activity in the
next six months improved with 95% of businesses anticipating improved or
the same level of sales.
slows from unsustainable high levels
Trade data indicate that investment is likely to have experienced a
strong slowdown in the final month of the third quarter.
Capital goods imports grew a paltry 4.9% in September, which
represented a pronounced slowdown from the 23.4% expansion observed the
In fact, the September reading represented the first month with
single digit year-on-year growth since February.
As a result, the annual growth rate of capital goods imports
dropped from 19.9% in the second to 13.1% in the third quarter.
growth engine remains sturdy
Trade data further indicate that strong export growth was sustained in
the third quarter.
In September, exports rose 39.5% over the same month last year.
The September reading was ahead of the already sound 34.6%
expansion observed the prior month.
The healthy pace in traditional exports growth (+63.4% yoy)
accounted for the strong export expansion, as non-traditional exports grew
at a lesser pace (+23.6% yoy).
Within traditional exports, the strong expansion in sales of oil
and its derivatives explain the September boost.
Non-traditional exports profited from pronounced sales of vehicles,
plastics and clothing.