Colombia Industrial Output Falls Again in Jan

Colombia’s industrial production slipped into a second straight month of contraction in January, raising questions about the durability of the country’s broader economic recovery as manufacturing and mining drag on output. The national statistics agency DANE reported the Industrial Production Index fell 0.5% year-on-year to start 2026, following a 0.6% decline in December 2025 that had already reversed months of modest expansion. The Rio Times, the Latin American financial news outlet, tracks Colombia’s economic indicators and their implications for regional markets.

Colombia Industrial Production Splits Down the Middle

The January data revealed a nearly even divide across Colombia’s industrial landscape. Of the 26 industrial activities tracked by DANE, 15 posted negative year-on-year variations, subtracting 2.2 percentage points from the headline index, while just 11 recorded gains, contributing 1.7 percentage points. The net result left Colombia industrial production in negative territory for the second consecutive reading, a streak not seen since the sector’s more prolonged downturn in late 2023.

The weakest performers were concentrated in capital goods and equipment. Machinery and equipment manufacturing suffered the steepest drop at -10.6%, followed by electrical apparatus and equipment at -9.6% and miscellaneous manufacturing at -7%. These declines suggest that business investment in new productive capacity remains hesitant despite the central bank’s rate-cutting cycle, which has brought the benchmark rate down from a peak of 13.25% to 9.25% over the past two years.

Vehicles Surge While Mining Sinks

Not everything pointed downward. Vehicle, trailer, and semi-trailer manufacturing posted a striking 37.9% year-on-year jump in January, the strongest gain of any subsector. Other transport equipment followed at 26.6%, and furniture, mattress, and bed-spring production rose 13%. The automotive surge reflects both pent-up demand and the effects of Colombia’s 23% minimum wage increase that took effect in January, which has begun filtering through to consumer spending.

By sector, mining and quarrying contracted 4%, weighed down by coal extraction at -4.7% and oil and gas production at -3.8%. Manufacturing as a whole fell 0.5%. The two sectors that escaped negative territory were utilities and water services. Electricity and gas supply grew 2.7%, driven by a 3.8% expansion in power generation, distribution, and commercialization. Water capture, treatment, and distribution rose 3.7%, reflecting continued infrastructure investment in municipal services.

Broader Context: Recovery With Fragile Foundations

The industrial weakness sits uneasily alongside other signs of economic momentum. Colombia’s GDP grew 2.3% in the fourth quarter of 2025, and the Davivienda Manufacturing PMI recovered to 51.6 in February 2026 after touching a 10-month low of 50.0 in January, suggesting that the factory floor may already be stabilizing. However, rising input costs from the minimum wage hike are pressuring margins, and firms cut employment in February at the sharpest rate in nearly six years according to the PMI survey.

External headwinds add complexity. Ecuador imposed a 30% tariff on Colombian imports in February over drug-trafficking disputes, threatening roughly COP$4.5 trillion ($1 billion) in bilateral trade. The Iran war has pushed Brent crude past $105 per barrel, a mixed blessing for a petroleum-exporting economy whose oil and gas extraction is already contracting. Analysts at Allianz Trade project Colombia’s GDP will grow 2.8% in 2026, but note that the recovery remains uneven, with mining and construction lagging behind services and consumer spending. The Colombia industrial production data suggest that manufacturing has now joined the laggards, leaving the recovery dependent on an increasingly narrow base of service-sector strength.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error