Colombia's economy contracted 15.7pc in second quarter, gov't says

BOGOTA: Colombia's economy shrank 15.7% in the second quarter compared with the same period last year due to the economic fallout of the coronavirus in the worst quarterly performance for at least decades, the government's statistics agency said on Friday.

The figure was roughly in line with predictions by analysts, who said the Andean country's economy would suffer the worst contraction in its history during the quarter - estimating a median shrinkage of 16%.

The marked contraction is due to widespread economic shutdown during the first months of an ongoing national quarantine meant to curb coronavirus infections.

"Since the DANE (statistics agency) has been responsible, we can assert with certainty that this quarterly growth is the greatest in its negative sense," said DANE director Juan Daniel Oviedo, who cautioned that figures from some decades past were not comparable to current calculations.

Most sectors of the economy are now functioning again with new safety protocols, but many businesses were battered by the shutdown and unemployment spiked to nearly 25% in June.

The economy contracted 20% and 16.6% in April and May respectively, with the April figure being the largest fall on record.

Economic contraction in June was 11.1%.

Analysts surveyed by Reuters last month said retail, recreation and other services provided directly to the public would have been severely affected, but that the shutdown's effects would also be generalized across the economy.

Their predictions proved prescient: the recreation and entertainment sector contracted 37.1%, commerce shrank 34.3% and construction contracted 31.7%.

Contraction was 14.9% in the second quarter compared with the first, the DANE said. It also revised its first quarter growth figure up to 1.4% from an original 1.1%.

The economy will contract 5.95% this year, analysts have said, more than the 5.5% projected by the government.

The central bank's technical team last month revised its GDP contraction estimate for this year to between 6% and 10%. The bank's board has cut 200 basis points from the benchmark interest rate since a reduction cycle started in March.