Colombia’s economic contraction deepened slightly in the second quarter and pushed the Andean country into its longest recession in at least a decade as exports and manufacturing tumbled during the global crisis.
Colombian gross domestic product shrank a widely expected 0.5 percent in the second quarter compared with the same period of 2008, the government’s DANE statistics department reported on Thursday.
That was in line with a Reuters poll forecast and marked the third consecutive quarter of contraction. The last time Colombia suffered a similar recession was during its 1999 economic crisis.
The second-quarter result compared with a 0.4 percent contraction in first quarter GDP, according to revised figures. The DANE previously reported a 0.6 percent dip for the first quarter.
However, there were signs of improvement on a quarter-on-quarter basis, with the economy growing 0.7 percent between April and June, up from 0.3 percent expansion in the first quarter and a 1.4 percent contraction in the last three months of 2008.
Colombia, the fifth-largest economy in Latin America, has seen key exports of oil, coffee and coal fall due to lower demand caused by the world financial crisis. The decrease has suppressed manufacturing, cut tax revenues and contributed to a rise in unemployment.
Also taking a toll is the clampdown on commerce by No. 2 trade partner Venezuela to protest Colombia’s deepening military ties with the United States.
Colombian President Alvaro Uribe is Washington’s key ally in the region, where neighboring governments in Venezuela and Ecuador often criticize U.S. foreign policy.
In the first six months of the year the Colombian economy shrank by 0.5 percent compared with the same 2008 period, the DANE said.
Colombia’s government says it expects an improvement in the second half and that growth for full year 2009 will be nil to slightly positive.
“If we have a good second half we’ll be able to get by without a negative figure (for the full year),” Uribe told reporters in New York where he attended the annual meeting of the U.N. General Assembly.
“If we push, this will be possible because the figures from the first and second quarters were not as bad as they could have been and investment continues to be strong,” Uribe said.
The row with Venezuela remains a source of uncertainty. Leftist Venezuelan President Hugo Chavez says Colombia’s plan to allow U.S. anti-narcotics operations to be carried out from its territory poses a threat to regional stability. (Reuters)