Colombian GDP Lags Forecasts, Bolstering Petro’s Calls for Faster Easing

(Bloomberg) -- Colombia’s economy lagged forecasts in the first three months of the year, boosting the chances that the central bank will accelerate the pace of interest rate cuts.

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Gross domestic product 1.1% in the first three months from the previous quarter, the statistics agency said Wednesday, below the median forecast of 2.1% of analysts surveyed by Bloomberg. Activity expanded 0.7% from a year earlier.

The economic activity index for March contracted 1.5%, its worst performance in more than three years.

Read more: Colombia Core Inflation Plunges, Boosting Faster Rate Cut Case

President Gustavo Petro has repeatedly blamed high interest rates for the economy’s sluggish performance, but inflation fears have so far deterred the central bank from heeding his calls for faster monetary easing. Petro renewed his call for cuts in a post on X on Tuesday night.

Financial services contracted 2.8% from the previous quarter, while agricultural output expanded 1.4%.

The economy last year grew at its weakest pace since 1999, excluding the pandemic, and the central bank forecasts another poor year in 2024, with an expansion of 1.4%.

The bank last month cut its key interest rate half a percentage point to 11.75%, which is the highest among major inflation-targeting economies in the Latin America.

The expansion in agriculture, oil, and mining that supported growth at the start of the year, will likely be reversed in the remainder of the year, economists from Bloomberg Economics, Banco de Bogota SA, and Corficolombiana SA said before the GDP data release.

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