Interbolsa SA, Colombia’s largest brokerage firm, expects the economy in the second quarter of the year to have expanded 5.1%, slightly higher than the central bank’s estimate of 4.9% growth.
The brokerage firm said in a note that some key leading indicators showed robust economic activity in the second quarter, especially in mining and retail.
Investment in the mining industry was $4 billion in the first half of the year, and relatively high prices for Colombia’s key commodities like oil, coal and gold will continue to boost growth in that sector, which accounts for 13% of gross domestic product.
Retail is also growing at a faster pace than initially expected, Interbolsa said, citing an 8.1% increase in consumer credit in June and higher consumer confidence data.
The central bank said Friday that it expects second-quarter economic growth to come in between 4.3% and 5.5%, with “4.9% as the most probable figure.”
The central bank said in its monetary policy minutes that higher private consumer demand and higher revenue from mining were boosting economic activity.
The central bank said that it expects the economy to grow between 3.5% to 5.5% for 2010.
Colombia’s faster economic growth this year, after climbing a tepid 0.8% in 2009, is yet to create inflationary pressures. The consumer price index decreased 0.04% in July as food prices dropped 0.5% on the month. Food prices account for 28% of the CPI.
Colombia’s 12 month-running inflation rate stands at 2.24%, the lower range of the central bank’s inflation target of 2% to 4%.
The relatively low inflation readings so far this year will allow the central bank to keep its benchmark rate at 3% probably until the end of the year, economists have said. (Darcy Crowe / Dow Jones)