(Bloomberg) -- Colombia’s economy grew much faster than expected at the start of the year, with record low interest rates supporting a revival in domestic demand.
Gross domestic product expanded 2.9% in the first three months of the year from the previous quarter, more than three times the 0.9% median forecast from analysts surveyed by Bloomberg. GDP rose 1.1% from the same quarter last year, the national statistics agency said Friday.
A month before mass unrest erupted across the nation, the economy was expanding at its fastest pace on record, according to a separate indicator published alongside the GDP report. The monthly economic activity indicator known as ISE registered an 11.8% expansion in March, the fastest since records began in 2006.
Today’s reports show Colombia was rebounding strongly from its deepest ever crash last year. But the outlook for the current quarter is less rosy as social unrest and a new wave of Covid-19 infections hit the country. Central bank co-director Jaime Jaramillo this week described the growth outlook as “grim”.
Read More: Central Banker Expects Significant Damage From Colombian Unrest
Colombia’s economy will grow 5.2% in 2021, according to an International Monetary Fund forecast published before today’s report. That would be a slower expansion than in Peru and Chile, but faster than in Mexico and Brazil, according to the Fund’s estimates.
Anti-government protesters have blocked highways in recent weeks, disrupting business, hurting confidence and blocking access to Colombia’s main Pacific port. The protests were triggered by the government’s plan to raise taxes, but continued over a range of other grievances even after the proposal was withdrawn.
“April and May are a perfect storm, with the third Covid wave as well as the demonstrations,” that could erase the gains of the first quarter, Scotiabank analyst Sergio Olarte said in a phone interview before the GDP report was published.
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