Colombia’s economy grew 4.9% in the second quarter of this year compared to the same period of 2011, said the state statistics agency Dane on Thursday.
The country’s gross domestic product (GDP) grew 1.6% from April to June against the first three months of the year, backing up a report Tuesday attributing Colombia to having one of the fastest growing economies in the world.
Taxes, duties and subsidies overall rose 5.4%, which is good news for the country’s new finance minister Mauricio Cardenas, who will present a tax revision to Congress in the first week of October.
A general slowdown in the global economy along with a dragging performance from the agriculture sector resulted in a growth of only 2.2% in the second quarter of this year against the same quarter in 2011, and manufacturing which actually decreased by 0.6% in the same time frame, have prompted the central bank to slash the country’s benchmark interest rates in an effort to boost the economy.
The trend in interest rate cuts is expected to continue, however some pressure is taken off by the strong performance of sectors such as construction which grew by 18.4% in the second quarter of this year against the same quarter in 2011, and mining which grew by 8.5% in the same time frame.
It is hoped lower interest rates will help to reduce the gap with interest rates in the U.S., and ease pressure on the strong peso which recently caused the Colombian government to buy up to $40 million a day on the foreign exchange market.
Latin America’s fourth largest economy grew 5.9% overall in 2011, the growth fuelled by an increase in foreign investment in oil and mining along with a surge in consumer demand. By the end of 2012 however, the economy is expected to have grown just between 4.7% and 5%.
Colombia ranks 14th among 66 countries that have disclosed information about their growth in the second quarter of this year.
Other sectors included in the report showing the percentage increase in the second quarter of this year against the same quarter in 2011 are: financial, insurance, real estate and business services at 5.1%; trade, repair, hotels and restaurants at 4.3%; social, community and personal services at 3.9%; transport, storage and communications at 3.6%; and electricity, gas and water at a 3.2% growth.