Colombia’s Interest Rates ‘Strangle’ Economic Growth, Petro Says

(Bloomberg) -- President Gustavo Petro lashed out at Colombia’s central bank Wednesday evening, saying that the country’s weak economic growth is due to restrictive interest rates that are throttling internal demand.

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His comments come on the heels of a government report posted earlier in the day that showed first-quarter output lagged economists’ expectations while March economic activity had its worst performance in more than three years.

The situation would be more dire if it weren’t for the government’s counter-cyclical fiscal policy, the leftist leader said in a post on its X account, which has prevented the Andean nation from suffering an economic recession.

“While the interest rate strangles the Colombian economy, my government’s countercyclical action keeps it afloat,” Petro said. “The red numbers in the private sector are established by the drop in housing that drags down industrial products for construction.”

Gross domestic product expanded 1.1% in the first three months of the year from the previous quarter —- a little more than half the median estimate of economists surveyed by Bloomberg — while the March GDP-proxy fell 1.5%.

Read more: Colombian GDP Lags Forecasts, Bolstering Case for Faster Easing

Petro, and his Finance Minister Ricardo Bonilla, have made repeated calls for the central bank to accelerate reductions in the policy rate, which is the highest among Latin American inflation-targeting economies.

Since December, policymakers have decided in split votes to lower borrowing costs by 150 basis points to 11.75%.

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