Colombia’s industrial production, excluding coffee processing,
contracted 14.5% in April from the same month in 2008, according to
official data released Thursday.
Production of vehicles shrank 64.3% in April from the same month
last year, followed by the clothing sector, which contracted 36.9%, the
country’s national statistics department reported.
Employment in the industrial sector fell 6.9% in April from the same month in 2008.
Industrial production was hit by the Venezuelan decision to reduce
imports of Colombian cars. Venezuelan President Hugo Chavez said he
will grant permits for Colombian car producers to sell 5,000 public
transportation vehicles and 5,000 heavy cargo trucks this year.
The Venezuelan 2009 import quota for Colombian vehicles is
substantially lower than the 22,500 and 45,000 quotas granted in 2008
Industrial production in the first four months of the year contracted 9.3%.
Julian Cardenas, head of research at local brokerage Corredores
Asociados, was surprised by the bad data as he was expecting a
contraction of 9%.
The disappointing data will likely force the central bank to cut
rates by 50 basis points Friday to 4.5% and again in July to leave
rates at 4%, Cardenas said.
The central bank has cut rates by 500 basis points since December
as the economy shifted from an overheating economy to a slumping one.
The Colombian economy contracted 0.7% in the fourth quarter of last
year from the same period a year ago, leading some economists to think
the economy is already in recession. Cardenas estimates that the
economy contracted 2.5% in the first quarter of the year. (Dow Jones)