By Helen Murphy and Nelson Bocanegra
BOGOTA, June 20 Colombia's economic growth
slowed in the first quarter to 2.8 percent from a year earlier,
the government said on Thursday, as a series of labor disputes
added to weak global demand that hit the Andean nation's exports
and manufacturing sector.
The year-on-year growth is well below the expansion in the
first quarter of last year, when it grew a revised 5.4 percent
compared with 2011. The annual figure for the 2013 quarter met
estimates in a Reuters poll.
The new data fell short of the 3 percent expansion expected
by Finance Minister Mauricio Cardenas. The economy grew 0.3
percent from the fourth quarter.
"We aren't surprised by the number," Cardenas told
reporters, adding the second quarter would be better than the
first. "The economic motors have to keep advancing, we have to
continue with the rhythm of the housing motor, the mining motor
and the infrastructure motor."
Colombia's economy, mostly driven by oil and mining, has
been hurt by weak overseas demand due to the global economic
downturn, which has pushed commodity prices lower. A series of
labor disputes in the mining sector as well as with coffee
growers also hurt growth in the first three months of the year.
Cardenas last week cut the government's estimate for
full-year 2013 economic growth to 4.5 percent from 4.8 percent.
"The challenge is tough, especially in the industrial sector
and in construction if there isn't enough public spending during
the remainder of the year; that could make it hard to meet the
target of 4.5 percent," said Marisol Torres, an analyst at Helm
Bank. "The execution of the government budget is key."
Some economists still reckon the government's new 2013 GDP
estimate is far too optimistic and see expansion at no more than
4 percent this year.
Among sectors measured in the first quarter GDP data,
construction grew 16.9 percent, mining increased 1.4 percent and
financial services rose 3.4 percent. Industrial output slipped
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 also suffered because of
a strong peso that makes local costs more expensive and dollar
INTEREST RATES ON HOLD
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.
The first quarter GDP data makes it more likely the central
bank will maintain borrowing costs steady at 3.25 percent when
it meets next week. Policymakers had forecast the 2.8 percent
annual economic growth rate.
Problems in Colombia's labor market added to the general
economic malaise in the first quarter.
Workers at the largest coal exporter, Cerrejon, ended a
32-day strike in March, while coffee growers and truckers
blocked roads and prevented produce from getting to ports.
Loading at a port controlled by U.S.-based Drummond Ltd
, Colombia's second-largest coal miner, was also
suspended in February after bad weather caused a spill from
a barge into the water.
"What has damaged economic growth in the first quarter was
the drop in output and in the mining sector from the strike at
Cerrejon, the suspension in production at Drummond and less
demand from Europe," said Jorge Bustamante, head of the DANE