* Economy hurt by weak industry, construction data
* GDP contracts in third quarter vs previous three months
* Experts say central bank may cut key interest rate on
* Govt lowers 2012 growth target to 4 pct to 4.5 pct
* Sees GDP accelerating next year to 4.5 pct to 5 pct
By Jack Kimball and Nelson Bocanegra
BOGOTA, Dec 20 Colombia posted surprisingly weak
third-quarter growth on Thursday as the global slowdown bit into
expansion and boosted the likelihood policymakers would cut the
benchmark interest rate to spur the sluggish economy.
The Andean country's gross domestic product grew just 2.1
percent in the third quarter from the year-ago period - its
slowest pace since the third quarter of 2009 - and well below
The result was also much slower than the 7.5 percent
expansion recorded in the same quarter last year.
The economy also contracted 0.7 percent in the third quarter
from the previous three months, hurt by poor performances in
industry and construction, the official statistics agency said.
The slower pace of growth may give the central bank board
room to cut its benchmark interest rate at its monthly meeting
on Friday after a surprise cut last month aimed to boost
expansion in Latin America's fourth-largest economy.
"It was a total surprise. No one had been so pessimistic,"
said Camilo Perez, head of economic research at Banco de Bogota,
who said earlier this week that he thought the bank would hold
"This data changes the picture a little for us and we now
expect the bank to cut its interest rate on Friday," he added.
The forecast of a Reuters poll of 25 economists on Monday
expected annualized growth of 3.97 percent in the third quarter.
The central bank had forecast the economy would
post growth of between 3.3 percent and 4.8 percent.
The economy expanded 4.9 percent in the second quarter.
Colombia's third-quarter growth was still faster than
Brazil's 0.9 percent, but slower than the 3.3 percent in Mexico,
5.7 percent in Chile and 6.5 percent in Peru.
The nation's economy was dragged down in the quarter by a
steep decline in the construction sector and weaker
manufacturing, falling 12.3 percent and 0.1 percent,
Investment in public works dropped nearly 15 percent in the
period, while mining rose a modest 0.5 percent and the
entertainment sector grew 3.7 percent.
"It's a figure that puts us on alert and forces us to look
in detail at certain aspects especially related with public
investment, with mining," sa id Ma uricio Santa Maria, head of the
nat ional planning dep artment.
His department expects fourth-quarter growth to accelerate
to more than 4 percent.
Fallout from a weakening global economy has forced the
central bank to cut rates three times this year in an effort to
boost growth while inflation remains near the mid-point of the
monetary authority's 2 percent to 4 percent target range.
A majority of economists expect the bank to cut its interest
rate on Friday after a slowdown in economic growth in the third
quarter, according to a Reuters poll on Thursday.
Now 16 of 24 economists believe the monetary authority will
lower its rate from the current 4.50 percent. In a survey on
Monday, 23 of 26 experts said the bank would keep its interest
The first major data published in the fourth quarter showed
continued weakness in the economy. Retail sales fell 0.3 percent
in October while industrial production rose only 1.2 percent.
Colombia lowered its economic growth forecast for full-year
2012 to between 4 and 4.5 percent, due to weak expansion in the
third quarter, from a previous target of 4.8 percent, according
to the national planning department.
The GDP should speed up next year and expand between 4.5
percent and 5 percent, i t said.