Colombia’s Economy Accelerates Despite Headwinds

Colombia’s GDP grew 7% year-over-year in the third quarter of 2022, beating the analysts’ estimation of 6.7%, according to data released by the country’s national statistics agency, known as DANE.

With a growth of 12.6% in the previous quarter, Latin America’s fourth largest economy has managed to grow 9.4% this year.

Colombia’s growth was largely driven by increased household spending and renewed activity in the ICT and entertainment industries. Mining grew by 2.5%, while agriculture shrunk by 1.4%. Analysts blame climate change for the sharp decline in agriculture output.

#PIB #DANELeCuenta 👉Según cifras preliminares, para el III trimestre de 2022 —serie original— el Producto Interno Bruto registró un crecimiento anual de 7,0 %. En la serie ajustada por efecto estacional, el PIB creció 1,6 % frente al II trimestre de 2022. pic.twitter.com/cMs8UzgFFa

— DANE Colombia (@DANE_Colombia) November 15, 2022

Colombia is a major exporter of oil and coal, but mining activity slowed down significantly in recent months largely due to the government’s refusal to issue new licenses.

Economists warn that GDP growth might slow down in the months to come, pointing to inflation and the rising cost of imports.

Under a complicated economic climate, recently elected leftist President Gustavo Petro is gearing up to raise taxes to generate US$4.16 billion in government revenue annually for the next four years, aiming to use the money to fund social programs.

Analysts expect that the rising interest rates resulting from the sky-high inflation will inevitably dampen consumer spending.