EconomyFinancialColombian economy grew 1.1% in the first quarter of...

Colombian economy grew 1.1% in the first quarter of 2021

It beat the predictions of several analysts, whose projections ranged from -1.9% to 0.1%. According to DANE, the Economic Monitoring Index (ISE) in March was 11.8%.

This Friday, the National Administrative Department of Statistics (DANE) reported that the national Gross Domestic Product (GDP) grew in the first quarter of 2021 at a rate of 1.1% compared to the same period in 2020. With respect to the immediately previous quarter, the economy grew 2.9%.

It should be said that this 1.1% expansion exceeded the predictions of several analysts, whose general projections ranged between -1.9% and 0.1%. And it is the first time that the quarter has been in positive territory since the pandemic began.

Also read: How the Colombian economy has fared in 2021

According to DANE, the activities that explained this rise were manufacturing industries, which grew 7% and contributed 0.9 percentage points (pp) to the annual variation. Then, public administration and defense, compulsory social security plans, education and human health care and social services activities, which grew 3.5% and contributed 0.5 pp to the annual variation).

The third activity that contributed was agriculture, livestock, hunting, forestry and fishing, with a growth of 3.3% and a contribution of 0.3 pp.

For the first quarter, household spending grew 1%, while that of the Government grew 4.6% on account of the aid provided in the pandemic.

According to DANE, the Economic Monitoring Index (ISE) in March maintained an annual growth rate of 11.8%. In the same month of 2020 it had registered a drop of -7.2%.

The economic activities that grew the most in the quarter were arts and entertainment (7.6%), financial and insurance activities (4.9%) and manufacturing activities (7%).

Likewise, those that fell the most were mining and quarrying (-15%) , construction (-6%), electricity, gas and water services (-1.3%), and commerce, transportation and food services ( -0.8%).

On this aspect, Juan Daniel Oviedo, director of DANE, highlighted that some activities such as construction were slowed down by the quarantines in March.

However, Luis Fernando Mejía, director of Fedesarrollo, highlighted that this sector had a significant recovery (17%) compared to the immediately previous quarter, when it had fallen at rates of 25% . “This shows that the construction sector could begin to contribute to economic growth in the coming months,” said Mejía.

Mauricio Santamaría, director of Anif, celebrated the growth of 1.1% of the GDP in the first quarter, highlighting that at the end of March “the activity was already at prepandemic levels”.

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For his part, José Manuel Restrepo, Minister of Finance, stressed that the manufacturing industry is the one that has contributed the most to this growth, without leaving behind artistic activities, which had a significant expansion.

“These figures show that the public sector is performing a countercyclical task, growing its activity as public administration by 3.5%. We also see with satisfaction a double-digit growth rate of investment in our country and also that exports show a growth of 13%, being one of the highest figures in the history of our country “, said the head of the portfolio.

Sergio Olarte, chief economist at Scotiabank Colpatria, affirms that the figures indicate that “we are coming out of the recession” on account of sectors that have been better able to adapt to the new conditions of the economy with partial mobility restrictions and that had a greater expansion as expected.

“We still need to see a significant recovery in investment, which makes a long-term recovery take place,” said Olarte. Although the expert believes that there will be an improvement in the annual growth projection of 5%, he also says that the current ten days of unemployment could lead to a slowdown of the economy in the second quarter.

Mejía, from Fedesarrollo, agrees on that. Although he added that “we must not forget that the second quarter of the previous year was the worst in economic matters , so we should not be surprised by figures for the second quarter close to 10% or even above that figure”.

For Mejía, this growth indicates that the economic recovery period has surely started and sheds good light on what is expected in terms of growth for the rest of the year. It also projects an expansion close to 5%.

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Entrepreneurs had mixed opinions about the growth of the economy. For Jaime Alberto Cabal, president of Fenalco, the 1.1% increase in GDP “is poor growth. Perhaps better than previously thought, considering the severe restrictions in January and those at the end of March. Once again it is shown that commerce, gastronomy and accommodation services are the most affected, with a negative growth of 0.8% ”.

For Bruce Mac Master, president of Andi, the data confirms “the ability of our productive apparatus to overcome the difficult situation generated by COVID-19, which affected the entire chain: from farmers, transporters and shopkeepers, to industry And trade. For the same reason, the effect of the strike on the recovery that was just starting is worrisome . ” Andi also highlighted the behavior of domestic demand in the country, which grew 1.6% compared to the first quarter of 2020. By components, final consumption increased 1.5% and gross capital formation grew 1.4%.

Rosmery Quintero, president of Acopi, which brings together micro, small and medium-sized companies in the country, pointed out that “it is good news that the manufacturing sector, which is highly represented in MSMEs, is one of the sectors with the greatest contribution. Hopefully this message reaches the people who are leading blockades and causing damage to the institutions and the business sector ”.

In turn, Camilo Rodríguez, president of the Colombian Chamber of Clothing and Allies, is concerned that the clothing subsector was the one that contributed the most to the loss of jobs within the manufacturing industries. “We need to regain confidence and economic dynamism to be able to get out of this gap in which we find ourselves,” he said.

You may be interested: Production of the manufacturing industry increased 20.7% in March 2021

President Duque also referred to the results of DANE, stating that “the recession as such has ended and the path of recovery of our economy is beginning. The challenge we Colombians have is that this reactivation continues to be dynamic, that in our second quarter and in all that remains of this year we reactivate Colombia, because the generation of employment depends on that, ”said the president.

Along these lines, he made an energetic call for the road blockades to cease “which could make us lose everything we have done for the reactivation of our country.”

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