Colombia's Economic Growth Exceeds Expectations Amid Inflation Challenges

Colombia's economic growth reached 2.1% year-on-year in the second quarter, according to the government's DANE statistics agency. This falls short of the anticipated 2.6% growth rate projected in a Reuters poll.

Despite grappling with above-target inflation and maintaining a 9.25% interest rate, Colombia has shown resilient domestic consumption this year. This pushed the annual growth to 2.7% in the first quarter. Forecasts from analysts suggest a full-year growth of 2.6%, while the central bank's technical team projects a slightly better 2.7% expansion.

However, experts have raised concerns about potential inflationary risks and a worsening fiscal situation, which could constrain further growth and impact the central bank's interest rate strategy. While substantial growth was noted in the arts and entertainment sector (7.5%), trade (5.6%), and agriculture (3.8%), sectors like mining and oil suffered a 10.2% decline, and construction decreased by 3.5%.