GDP for the second quarter of 2023 grew a languid 0.3%: DANE says this is due to the end of the post-pandemic rebound effect

To the symptoms of economic deceleration that the country is experiencing, such as the low dynamism of trade and the fall in consumption and manufacturing production, are now added the worrying results of the GDP for the second quarter of 2023 that DANE released this morning.

Experts and markets had estimated that the Gross Domestic Product (GDP) would fall in the second quarter of 2023. In fact, and according to the results that the National Administrative Department of Statistics (DANE) has just presented, the variation of the GDP for the second quarter of 2023, with respect to the same period of 2022 (12.2%), stood at 0.3%, while in the first quarter of the year it was 3%.

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The figure is close to the sub-1% growth projections of several analysts. In June, BBVA Research projected growth of 0.6% and Banco de la República 0.7%. In August, Banco de Bogotá projected growth of 0.4% and Bancolombia said it would be 0.3%.

The low growth (of 0.3%) in the country’s production of new goods and services adds to the drop in manufacturing production in June 2023, which registered a drop of -4.8% compared to the same month in 2022, and to the drop in the value of exports, which in June 2023 fell 27.5% compared to June 2022.

DANE Director said that the 0.3% growth in the GDP of the second quarter of 2023 coincides with the forecasts of several analysts.

According to the director of DANE, Piedad Urdinola, the current results show that “we were coming from quite unusual growth for the Colombian economy. If we compare them with the same period [second quarter] of last year (12.2%), they are quite high”.

Compared to the result of the same quarter of 2022, the 0.3% growth in the GDP of the second quarter of 2023 reflects the rebound effect of what happened during the pandemic, Urdinola pointed out: “We are already behaving, as many analysts expected and predicted as we showed, with expected growth rates after that great rebound we had during the recovery from the pandemic”.

Health activities, online gambling and mining, among the activities that added the most to the GDP in the second quarter of 2023.

Likewise, Urdinola affirmed that the GDP dynamics of the second quarter of 2023 is punctuated by the positive contribution of three subsectors: (1) Public administration and defense, Education and human health activities; (2) Arts, entertainment and household activities, and (3) Mining and quarrying.

In total, the three groups contributed 1.4 percentage points (p.p.) to the 0.3% annual variation of GDP in the second quarter of 2023.

In the first line were Public administration and defense; Education and human health activities, which contributed 0.7 p.p. Although these activities contributed to growth, health activities showed greater dynamism in the second quarter of 2023 with respect to the same period of the previous year, Urdinola explained. As for the annual growth rate [second quarter of 2022 compared to the same period of 2023], this was recorded at 4.5%.

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In second place are artistic, entertainment and household activities, with a contribution of 0.5 p.p. and an annual growth rate of 12.2%.

In this group, betting and gambling, especially on the Internet, continued to contribute to the growth of Colombia’s economy. “Online gambling continues to be very dynamic”, explained Piedad Urdinola.

Lastly, the third sector contributing to GDP growth was Mining and Quarrying, with 0.2 p.p and an annual growth rate of 3.8%.

Trade, Transportation, Manufacturing and Construction, among the sectors that subtracted from the GDP in the second quarter of 2023.

On the other hand, the activities that subtracted the most from the GDP of the second quarter of 2023 were (1) Trade and Repair, Transportation and Storage, Accommodation and Food Services, with -0.6 p.p. to the contribution of value added and an annual growth rate of -3.2%.

These are joined by (2) Manufacturing Industries, with -0.5 p.p. (-4% in annual growth rate); (3) Construction, with -0.2 p.p. (-3.7%); (4) Agriculture, Livestock, Hunting, Forestry and Fishing, with -0.2 p.p. (-1.4%) and (5) Professional, Scientific and Technical Activities, Administrative and Support Service Activities with 0.01 p.p. (-0.2%).

GDP for the second quarter of 2023: From 3% in the first quarter to 0.3% in the second quarter

The slight GDP growth of the second quarter of 2023, compared to the first quarter of the same year, shows a drop compared to the growth of the first quarter of this year, which stood at 3%.

Among the sectors that contributed to the negative growth in GDP in the second quarter of 2023, compared to the first quarter, were (1) Financial and insurance activities, which decreased 3%, (2) Wholesale and retail trade; Repair of motor vehicles and motorcycles; Transportation and storage; Accommodation and food services, which decreased 2.9%, and (3) Manufacturing industries reported a decrease of 2.6%.

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