Colombian economic activity continues monthly deceleration rate in October

Colombian economic activity continued its monthly decline last October and continued to set the pace for the slowdown, after it fell -0.03% in September compared to August.

The annual growth of the economy’s activity was 4.6% for October, but presented a month-on-month drop of -0.6% compared to September, the National Administrative Department of Statistics (Dane) reported on Monday.

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The annual result through October is below the estimates of the Colombian Economic Activity Indicator (IAECO) of Banco de Bogotá of 5.2% and the Bancolombia Nowcast Index of 4.8%, but above the estimate of Housing of 4%.

The greatest positive contribution to the annual variation of the Economic Monitoring Indicator (ISE) was provided by artistic, entertainment and recreation activities and other service activities; manufacturing industries; public administration and defense, education and human health, which contributed 3.2 p.p as a whole.

According to Dane, the economic activities that contributed the most to growth in October were tertiary (6%), which contributed 4.4 percentage points to the annual variation of the ISE in its original series.

Meanwhile, primary activities decreased 3.5% and contributed -0.4 percentage points to the annual variation of the ISE.

And secondary activities grow 4% and contribute 0.6 percentage points to the annual variation.

According to the figures presented by Dane, the Colombian economy was among those with the highest annual growth in October compared to other markets in the region such as the Dominican Republic (3.8%), Brazil (3.7%), Peru (2 %), Costa Rica (1.3%), Paraguay (1.2%) and Chile (-1.2%).

The cooling of the economy in October would be explained, according to Juan Pablo Espinosa, director of economic research at Bancolombia, “by a slower rate of progress in both manufacturing production and trade, sectors that were key to the economic recovery.”

From the point of view of Sergio Olarte, chief economist at Scotiabank Colpatria, “the services economy is still quite strong but gradually slowing down, while the goods economy, especially the mining, primary activities and oil sectors, still lags far behind.”

In October “the slowdown trend will continue for several reasons, firstly because of a statistical base that is going to be much higher next year and secondly because it is noted that household consumption is slowing down with a consumption portfolio that is even showing some deterioration in the margin and with high usury interest rates, which makes the demand for credit less,” Olarte highlighted.

With information from Bloomberg Línea