* Economic growth supported by construction sector
* Finmin sees 2012 growth between 4.7 pct-5 pct
* Cardenas wants cenbank to continue buying dlrs
By Jack Kimball and Nelson Bocanegra
BOGOTA, Sept 20 Colombia's economy grew 1.6 percent in the second quarter versus 0.2 percent in the first quarter helped by strong expansion in the construction sector, the government's statistics agency said on Thursday.
The faster quarter-on-quarter growth could give the central bank room to pause in reducing its benchmark interest rate at its meeting next week after two consecutive cuts and wait for more data from the third quarter.
But some experts say poor industrial production data and retail sales in July could lead to another rate cut to stimulate growth in Latin America's fourth-largest economy.
The country's gross domestic product grew 4.9 percent in the April-June period versus last year, the statistics agency said, higher than analysts' expectations. The economy expanded 4.7 percent in the first quarter.
The median forecast of 32 analysts polled by Reuters on Monday expected growth of 4.38 percent year-on-year in the second quarter, hurt by weak growth of industry, oil output, trade and exports.
"Second quarter GDP data from Colombia are not as strong as they seem at first sight. Almost all of the pick-up in growth to 1.6 percent quarter-on-quarter was driven by a sharp rise in construction output, which tends to be fairly volatile component of GDP," the London-based Capital Economics said in a note.
"Indeed, we estimate that without the boost from construction, the economy would have expanded by just 0.6 percent quarter-on-quarter or 2.4 percent annualized."
Economic expansion was pushed up in the second quarter by strong growth in the construction sector, which weights 5.9 percent in the GDP, g r owing 14.6 percent in the second quarter versus the first quarter, the data showed.
Finance Minister Mauricio Cardenas said construction was stronger due to more spending on the El Dorado International airport in Bogota.
Manufacturing, however, which weights 12.9 percent in the GDP, p erformed poorly as expected.
"Everything suggests that this bad moment for industry has already touched bottom and for the third quarter, we're going to have positive growth rates again," Cardenas told reporters after the data was released.
Quarterly growth in the second quarter last year was 1.4 percent and annual expansion was 4.9 percent in the April-June period, according to data from the agency.
Regionally, Colombia's annualized second-quarter growth of 4.9 percent compared with expansion of 4.1 percent in Mexico, 6.1 percent in Peru and 5.5 percent in Chile.
Cardenas said the economy could grow between 4.7 percent and 5 percent in 2012. The official government target is an expansion of 4.8 percent.
NEXT RATE MEETING AND THE PESO
After a press conference, Cardenas told Reuters that he would ask the central bank to keep buying $700 million monthly to ease pressures on the peso currency, which is the world's fourth-strongest gaining currency.
The bank announced at its last policy meeting in late August that it would buy at least $700 million through September. The bank's board meets again on Sept. 28.
Fallout from a weakening global economy has forced the central bank to cut rates at the last two policy meetings to boost growth while inflation remains near the mid-point of the monetary authority's 2 percent to 4 percent target.
Colombia's government is also trying to cut three zeros off the peso currency, which President Juan Manuel Santos defended on Thursday, saying that it would aid in the battle against inflation and help the peso keep value.
When asked about the upcoming meeting, Cardenas said any decision on what to do with the rate would deal with the outlook for the global economy.
A slowdown in the growth rate of local industrial production and retail sales in July versus June, however, made some analysts change their minds on the meeting and they now see more of a likelihood of a cut.
"A rate cut is more probable now because although the historic information about the second quarter was good, the data from Wednesday will outweigh since it came in very low," said Camilo Perez, head of economic research at Banco de Bogota.