2025/08/14 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
Colombia’s economy grew below expectations in 2Q25. Activity increased 2.1% YoY in 2Q25 (+2.7% YoY in 1Q25), below BanRep’s staff forecast and Bloomberg market consensus (+2.7%), and our +2.9% call. In annual terms, activity was boosted by entertainment (+7.5% YoY, 0.3pp), commerce (+5.6% YoY, 1.1pp) and agriculture (+3.8% YoY, 0.4pp), while offset by a significant drop in mining (-10.2% YoY, -0.5pp) and construction (-3.5% YoY, -0.2pp). Sequentially, the economy rose 0.5% (SA) from 1Q25 to 2Q25 (+0.3% previously; revised from +0.8%), primarily lifted by public consumption and a gradual recovery of the gross fixed investment.
While imports remain upbeat, housing contained the recovery of gross fixed investment. Gross fixed investment rose 1.7% YoY (+1.5% in 1Q25), due to an increase in machinery and equipment (+11.6% YoY), but dragged by housing (-10.6% YoY). Total consumption increased by 3.8% YoY (+3.8% YoY in 1Q25), lifted by public consumption rise of 3.9% YoY (+3.8% YoY in 1Q25) and private consumption increase of 3.7% (+3.9% in the previous quarter). Although private consumption remained stable, internal demand expanded at 4.2% YoY, completing two quarters leading economic activity. Exports fell by 1.6% over one year (+3.0% in the 1Q25), while imports remained with a strong trend, increasing by 9.7% YoY (+11.8% in the first quarter of the year). On the supply side, the natural resource sector dropped 1.5% YoY (+2.3% in 1Q25), lifted by agriculture, but countered by the mining sector which posted a broad-based contraction led by coal (-14.2% YoY), metallic minerals (-20% YoY) and oil and gas (-6.9% YoY). Non-natural resource activity increased by 2.5% (+2.8% in the previous quarter).
Public consumption and gross fixed investment increased at the margin. Activity increased by 2.0% QoQ/saar, up from the 1.2% registered in the 1Q25. The seasonal and calendar adjusted series show that gross fixed investment increased 11.3% QoQ/saar (+0.3% in the previous quarter), while public consumption rose by 11% QoQ/saar (-2.4% in the 1Q25). Meanwhile, imports increased by 10.7% QoQ/saar (+9.3% in 1Q25), while exports fell by 1.2% QoQ/saar (-7.5% in the previous quarter). The coincident activity indicator (ISE) fell 1.1% from May to June (SA; -0.2% MoM in May). Nevertheless, on an annual basis, the ISE posted an expansion of 2.9% YoY in June, boosted by agriculture (+6.0% YoY); public administration (+5.4% YoY) and commerce (+4.5% YoY), but countered by mining (-4.5% YoY) and financial and insurance activities (-3.5% YoY).
Our Take: Activity continues to recover, driven by consumption that remains the main driver of economy recovery, while the agricultural, commerce and entertainment sectors are leading the path to recovery. We expect activity to grow 2.9% this year (+1.7% in 2024; +0.7% in 2023), but with a downside bias given the weaker-than-expected 2Q25 print.