* Q2 growth outlook, weaker currency helps industry
* Gov't maintains 2013 GDP growth estimate at 4.5 pct
* Economy growth seen faster in coming months
By Helen Murphy and Peter Murphy
BOGOTA, July 26 Colombia's central bank held its
overnight lending rate steady for a fourth straight month on
Friday and cut its 2013 growth forecast after a sluggish first
half but forecast an acceleration in growth through the end of
The unanimous decision by the seven-member board to maintain
borrowing costs at 3.25 percent was expected by all 25 analysts
surveyed by Reuters. The bank said the economy would grow
between 2.5 and 4 percent in the second quarter, up from 2.8
percent in the first quarter.
Policymakers have shaved 200 basis points off the lending
rate since July last year to help promote consumer
spending and industrial output, pushing growth in the economy
Even so, the board cut its forecast for 2013 economic
expansion to 4 percent from 4.3 percent. It said the revision
was partly explained by the behavior of the world economy and
private spending, which has been weaker than expected.
"We had expected the bank to start raising the interest rate
some time this year, but with this downward revision of economic
growth I think they will likely keep the rate steady until the
end of the year," said Andres Pardo, chief economist at
Bogota-based investment fund Corficolombiana.
"The economy is clearly recovering more slowly than
Finance Minister Mauricio Cardenas, who represents the
government on the board, maintained his economic growth figure
at 4.5 percent for this year, expecting each quarter to improve
on the last. Still, he has been less optimistic in recent days,
talking about GDP expansion above 4 percent. He already revised
down his growth estimate from 4.8 percent.
"Colombian economic growth is expected to increase
throughout the year to the extent that aggregate expenditure
reacts to prior monetary policy actions and programs that the
national government is running," the bank said in a statement.
The bank has been able to keep borrowing costs low as
inflation remains at the bottom end of its target range of 2
percent to 4 percent. Annual consumer prices in June rose 2.16
A weaker currency over the last several weeks has helped
exporters and industry, the bank said, as local costs come down
and imports become cheaper.
Industrial output was lower than the nation's installed
capacity, the bank's statement said, meaning there is still room
for consumer spending to rise without stoking inflation.
Policymakers have sought to counter weak international
demand for Colombia's commodities and a slowdown in industrial
output in the $330 billion economy as the global scenario
remains uncertain and the nation faces a rash of labor disputes.