Colombia | A Slow-Motion Growth

The GDP grew by 0.7% YoY in the first quarter. The growth slowed down, with March being the month with the least activity among the three months. Domestic demand was the main source of the low growth. The performance of fixed investment and the manufacturing industry remains concerning.

Key points

• Key points:
• Domestic demand remained the primary driver of low growth, contracting by 2.6% YoY. Household consumption grew slightly (0.6%), but fixed investment, as has been the case for the past five quarters., declined sharply (-6.5%). The significant decrease in imports (-12.9%) partially offset the weak performance of domestic demand.
• The economy's inventories continue to be particularly low, linked to the limited stock of housing construction in progress. Typically, the economy builds inventories in the first quarter in preparation for the seasonally higher domestic spending in the second half of the year. However, in the first quarter of 2024, the economy destocked inventories, a phenomenon not observed in any first quarter since 2006. This is a significant part of the explanation for the low GDP outcome.
• Investment remains the most concerning component of GDP, not only due to its short-term negative effects, which drag down the country's GDP, but also because it shapes long-term growth capacity.
• By economic sectors, GDP growth was led upwards by government, agriculture, and public services. Conversely, the industry, trade, transportation, accommodation and restaurants, and the financial sector made negative contributions.
• Looking ahead, BBVA Research maintains its expectation of 1.5% growth in 2024. The outlook is expected to be more positive in the latter part of the year compared to the first semester.

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