Itaú BBA - COLOMBIA – Robust activity in 2Q19

Macro Latam

< Volver

COLOMBIA – Robust activity in 2Q19

agosto 15, 2019

Local and global headwinds make a sustained recovery in 2H19 unlikely.

Activity remained robust in 2Q19, supported by internal demand. In the second quarter of 2019, activity grew 3.0% NSA in YoY, just above the Bloomberg market consensus of 2.9% and our 2.8% forecast. Partly, the surprise to us comes from an upward revision to 1Q19 growth to 3.1% from 2.8%, previously. As a result, growth in the first half of the year was 3.0% (2.6% in 2018). The seasonally and calendar days adjusted series indicates higher growth in 2Q (3.4% YoY). We do not expect the growth pace to be maintained in the second half of the year given local and global headwinds. Yet, the revised growth data puts an upside bias to our 2.6% growth forecast for this year.

Commerce and public administration services led activity in the quarter, while construction expanded once again. Commerce grew a solid 4.8%, from 4.1% in 1Q19, while financial services, despite moderating, remained elevated at 4.6% (5.5% in 1Q19). Construction increased 0.6%, after contracting in the previous quarter, as the civil works (lifted by advances in 4G investment projects) recorded the highest growth since 2Q14. Meanwhile, mining moderated to 1.2% (5.3% in 1Q19) as activity in the oil sector slowed down, while coal production contracted. Thus, the natural resource sectors growth moderated to 1.4% YoY from 3.4% as both mining and agriculture lost momentum.

Gross fixed investment and private consumption growth remained stable, while public consumption and exports moderated. Gross fixed investment rose 4.3%, broadly stable from an upwardly revised first quarter. The consumption moderation from 4.4% to 4.2% in 2Q19 came amid a public consumption slowdown to 1.9% from 3.3% in 1Q19, while private consumption remained stable at 4.6%. Net exports continued to drag activity in the quarter as imports grew an elevated 8.2% (from a downwardly revised 9.7% in the previous quarter) while exports moderated to 3.0% from 3.9% in 1Q19.

Momentum improved in 2Q19, but historical revisions lifted growth in the first quarter too. Adjusting for seasonal and calendar effects, 2Q19 activity accelerated to 5.6% qoq/saar from 3.3% in 1Q19 (revised up from 0.0%), lifted by improving investment and public consumption.

The still uncertain global scenario, a weakening labor market and low consumer sentiment represent headwinds that would limit a sustained recovery in 2H19. However, better activity at the beginning of the year, a still-wide current account deficit and elevated inflation outlook pose a risk to our call of monetary easing before yearend.


Miguel Ricaurte
Carolina Monzón


< Volver