Colombia’s economy expanded by a modest 0.7% in the first quarter of 2024, according to the National Administrative Department of Statistics (DANE). This figure, presented by DANE’s director, Beatriz Piedad Urdinola, marks the lowest first-quarter growth rate in four years. The last time the economy grew below 1% was in the first quarter of 2020, when GDP saw a 0.6% increase, and same quarter that witnessed the outbreak of the coronavirus pandemic in the country.
Despite the subdued growth, the 0.7% rise surpassed market expectations. Analysts had projected a more conservative outlook, with Fedesarrollo’s (Federation of Development) recent survey predicting a growth range between -0.2% and 0.6%, with an average expectation of 0.2%.
The latest data provides a snapshot of the challenges facing Colombia’s economy as it entered 2024. Market experts cite several contributing factors to the low growth rate, including a decline in consumer spending, market uncertainties, reduced investment, and global conflicts. The El Niño weather phenomenon has also exacerbated economic difficulties, leading to water rationing in Bogotá and nearly triggering energy shortages nationwide.
The Economic Research division of the Bank of Bogotá projected a 0.3% growth for the first quarter, attributing the modest performance to fewer working days, the impact of El Niño on the agricultural sector, and high interest rates set by the country’s Banco de la República – Central Bank.
DANE’s detailed economic activity report highlighted significant declines in key sectors. The manufacturing industry, which experienced a 10.8% drop in March, was the primary drag on the Economic Tracking Indicator (ISE). Commerce, transportation, and accommodation sectors collectively saw a 2.4% decrease in March, followed by agriculture (-4.2%) and financial activities (-6.8%).
In March 2024, manufacturing production plummeted by 11%, with real sales down 10.5% and employment decreasing by 1.9%. Out of 39 industrial activities, 36 reported negative production growth, with vehicle manufacturing and auto parts industries hit hardest, declining by 58% and 41% respectively.
The decline of 0.8% in commerce was driven by varied performance within sub-sectors: while wholesale and retail trade, including the repair of motor vehicles and motorcycles, grew by 0.6%, transport and storage decreased by 1.5%. Food services also marked a sharp deceleration of 3.4%.
As Colombia navigates deepening economic challenges, policymakers are closely monitoring upcoming quarters to gauge a trajectory of recovery and growth above one percent. The less-than-encouraging economic results raise questions about the policies of the country’s first leftist president, Gustavo Petro, as opposition leaders argue that his scandal-ridden administration continues to fuel market uncertainty and dampen investor confidence.
The less than encouraging data did not deter Finance Minister Ricardo Bonilla from predicting that “the ghost of a recession has become more elusive.” The relentless downturn in Colombia’s growth since Petro took office in August 2022 sparked, however, this response from rightwing Senator Maria Fernanda Cabal: “The current GDP reflects that Petro is equal to, or worse than, COVID-19.”
