Colombia’s economy grew 2% in the 2nd trimester of 2016, a worrying number, especially when considering the already low 2.5% growth of the first trimester of the year. In fact, it is the lowest trimestral growth in 7 years, since the economy posted a 1.3% growth in the third trimester of the year 2009.
This 2% growth figure means that Colombia closes the first half of 2016 with 2.3% growth.
The numbers are low, very low, as they signify near stagnation for an economy that should be growing at a much faster rate considering its intensification of extractive processes, as well as its transition into manufacturing and services.
When the figures are digested by sectors, they back the assumption that the diminishing growth is caused primarily due to the ongoing slump in the price of commodities, rather than unfavorable market policies or inefficient strategies.
The manufacturing sector, on one hand, showed remarkable resilience to the adverse international economic climate, and was relatively unaffected by the absence of liquidity in importing countries. Manufacturing grew 6% this trimester, a respectable figure by any standard.
The financial sector also grew, by a considerable 4.6%. This in itself is a symptom of prevailing trust in financial institutions, signaling that investors are not necessarily concerned by the management strategies of policymakers. Additionally, businesses are not suffering from lack of liquidity, neither are they seeing their savings threatened.
The beverage industry in turn grew 14.2%, which should give analysts a feeling of confidence, as increased consumption should mean that Colombians are not particularly cash-strapped.
In fact, all signs point to mining and oil as the reason for the reduced growth. The extractive industry shrank 7.1%. This worrying number responds to the global commodities crisis, and shows that Colombia can merely attempt to mitigate its effects by limiting extraction. Crude oil and natural gas extraction was reduced 11%.
There is little the government could do to overcome diminishing growth, it comes as a result of a decade long process of intensifying extraction, which leaves the economy vulnerable to international price fluctuations. Perhaps instead, 2016 should be taken as a wake-up call to reduce dependence on commodities, instead of a sign of inappropriate reactionary market policies from upper spheres of management.