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The growth of the Colombian economy was very weak during 2023 – news

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The growth of the Colombian economy was very weak during 2023 – news

Construction performed poorly in the country, largely due to the lower dynamism of housing construction and the low execution of civil works.

GDP grew 0.6% in the previous year, the fourth quarter had practically zero growth. The economy was driven by the public administration and the agricultural sector; without the public sector the economy would be in a technical recession.

Household consumption grew during the fourth quarter of 2023, meaning that in the total for the year, demand growth (1.1%) was greater than that of the economy, which shows that there is still a gap with the country’s productive capacity. .

On the external front, contrary to what was observed so far this year in the third quarter, imports grew during Q4 of 2023, partly evidencing the excess demand that persists in the economy.

Investment was the item with the worst performance in 2023. The accumulated fall of -8.9% is mainly explained by the contraction of machinery and equipment, as well as the lower dynamism of engineering works. The 2023 result was lower than expected. Monetary policy has achieved its objective of reducing inflation, but growth is already suffering. Although the level of activity relative to the pre-pandemic observed remains relatively high, these figures suggest that the Bank of the Republic can accelerate the rate cut and demand from the Government a strategy to reactivate public-private investment initiatives.

Colombia’s economic growth during 2023, which was a weak 0.6%, was below what the market expected and even the 1% predicted by ANIF.

In the fourth quarter the economy grew just 0.3%, compared to the same period in 2022. Undoubtedly, says the ANIF analysis, it is a worrying result, since the fragility of the economy in the face of a scenario of high rates has become evident. of high interest. It is also important to note that part of the gap between analysts’ projections and the official data is due to a downward revision of previous quarters. The above shows that the weakening of economic activity has been stronger than anticipated, the low or no growth during the last part reintroduces the concern of a possible recession.

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During the fourth quarter of 2023, the agricultural sector was one of the main drivers of growth, with a variation of 6.0% compared to the same period in 2022. Once the supply shocks of 2022 were overcome, the sector has proven resilient to the slowdown economic during the second part of the year. The production of coffee and other agricultural crops has boosted this sector, which in the first quarter of 2024 will have to face the hardening of the El Niño Phenomenon.

For its part, the mining sector has performed well throughout the year, favored by high oil and coal prices and good production performance. Even with all of the above, the sector has not managed to recover to its pre-pandemic levels.

The industry was one of the worst performing sectors during 2023, falling 3.5% compared to 2022. The slowdown in internal and external demand has led to it being one of the hardest hit sectors in 2023, contributing -0.6pp to the total variation of GDP in 2023.

The textile industry and branches related to the vehicle economy have been the hardest hit. Not only have they suffered a drop in sales and production, but also in employment.

For its part, construction was the branch with the greatest contraction compared to 2022 with a 4.2% drop in added value. The poor performance is largely explained by the lower dynamism of residential buildings and the low execution of civil works.

Meanwhile, commerce, transportation and tourism presented a drop in production of 2.8% compared to 2022. 2023 was a hard year for this sector, high inflation rates and the cost of credit affected the consumption of households that , faced with a squeeze on their finances, reduced the consumption of durable goods and spending on restaurants and hotels.

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