* Economists less optimistic about growth
* Demand for exports weak
* Stimulus plan may not have enough effect
(Adds context and comments on outlook, bond moves)
By Helen Murphy
BOGOTA, June 13 Colombia has lowered its target
for economic growth for the year to 4.5 percent from the
previous 4.8 percent, Finance Minister Mauricio Cardenas said on
Thursday, reacting to weak overseas demand and a sluggish
After months of sticking to the more optimistic growth
estimate, Cardenas said tepid first-quarter growth will prevent
the hoped-for annual acceleration in gross domestic product. The
economy likely grew 3 percent in the first three months of the
year, down from 5.3 percent in the same quarter a year earlier,
Economic growth eased to 4 percent last year from 6.6
percent in 2011. Cardenas had hoped a package of stimulative
measures announced in April, including accelerated spending on
infrastructure and aid to the construction sector, would push
GDP growth up to 4.8 percent this year.
"The economic panorama is good; we started the year with a
regular first quarter in the industrial sector," Cardenas said
at a financial conference in Bogota on Thursday. "We've revised
the estimate from 4.8 percent to 4.5 percent, we lowered it, but
4.5 percent is a good prognosis and would be a good result for
Cardenas kept his estimate for the central government's
budget deficit at 2.4 percent of GDP for this year, and said it
would be 2.3 percent in 2014.
Colombia's economy, mostly driven by oil and mining, has
been hit by weak overseas demand due to the global economic
slump, which has pushed commodity prices lower. Some economists
reckon the government's new GDP estimate is still too
optimistic. The government will release first quarter growth
data on June 20.
Nomura Securities has lowered its growth estimate to 3.8
percent from 4.2 percent, and the central bank forecasts 4.3
"We don't foresee any meaningful impact from the
fiscal-impulse program announced by the government," Nomura said
in a recent note to investors. "The bulk of the program is just
front-loading investment that had been announced for later in
Industrial production has fallen in the past five months,
while the value of exports has decreased for seven straight
months. Exports and factory output have been hurt by a strong
peso that makes local costs more expensive and dollar revenue
Colombia has cut its key lending rate by 200 basis points
since last July to counter weak international demand for
commodity exports and a slowdown in domestic demand in the $330
billion economy. The central bank put rate cuts on hold in April
to see if they were enough to revive the slowing economy.
Later on Thursday, Cardenas will reveal any revisions to
financing plans for this year and estimates for local and
overseas debt sales for 2014.
The government has "flexibility" when it comes to debt
issues and could substitute local peso-denominated debt, known
as TES, for bank loans or for multilateral loans if necessary,
he said on Thursday.
An improved outlook in the United States has already shown
signs of leading investors away from emerging markets such as
Colombia, pushing the yield on local TES bonds higher.
"We have the flexibility that allows us to administrate
these types things with a lot of ease and facility," he said.
Cardenas' comments pushed the yield on TES binds maturing in
July 2024 lower to 6.37 percent from 6.55 percent on Wednesday.
"Just those words alerted investors to their screens and
caused a correction in the yield," said Luis Acevedo, an analyst
at Bogota-based brokerage Serfinco.
(Reporting by Helen Murphy and Carlos Vargas; Editing by Leslie
Adler, Phil Berlowitz and Peter Galloway)