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Yesterday, Denmark published the results of Colombia’s gross domestic product (GDP) for the second quarter of the year. The economy grew by 2.1% in April-June, driven by the dynamism of agricultural and livestock activities and the public sector. In the first half of the year, GDP grew by 1.5%, showing a small positive recovery.
As expected, the national government came out to celebrate statistics that the economy is shaking off the spectre of recession. The President of the Republic, Gustavo Petro, described the performance of agricultural activity as “extraordinary” with a trembling voice and linked it to forced investments “for the consumption of our far-right entertainment circles”, unique in this sector.
That is, for the President, the quarterly growth rate of 2.1% means that “the change in the economic model from fossil extraction to production in agriculture, industry plus tourism has become noticeable.” Faced with a sharp economic slowdown, it is normal for the government to emphasize the positive results of the sector; however, reflecting the dynamics of the entire economic semester is still not enough to start the production engine.
Without neglecting the good growth rates of agricultural activities, public administration and entertainment, other sectors such as commerce and manufacturing performed particularly badly, at 0.2 and -1.6 respectively. Construction GDP fell by 2.8%, falling for four consecutive quarters. These three groups of activities are crucial to any roadmap to revive the economy, both in terms of their strength and connections, and in their ability to create jobs.
Equally worrying is the 3.3% drop in mining and quarrying. This is because, despite the government’s intention to reduce coal and stop new hydrocarbon exploration, the contribution of these production activities to the national economy, regional development and public finances remains irreplaceable. In fact, the restart plan would benefit from the inclusion of measures to accelerate these projects, provide confidence to investors and strengthen the country’s currently fragile energy security.
It is necessary to remember that one thing is that this rebound improves the economy, which is obviously good news for the country, but another thing, very different, is the need to develop and deploy economic recovery plans at this moment. Casa Nariño has set a six-week deadline to present these strategies and these second quarter results do not eliminate the urgency of this work.
Instead, consolidating this small rebound into a consolidated recovery path requires that the plan be structured as a coordinated effort between the government and the business sector. It is also important that the measures to be enacted should boost activities and job creation such as business, manufacturing and housing construction, where indicators have begun to deteriorate.
Moreover, in such a tight fiscal environment, it would be useful to know the size of the public budget resources available for recovery. Now is not the time to declare victory or talk about a “paradigm change”, but to agree on a comprehensive path that leaves no activity or business sector behind.
Francisco Miranda Hamburg
framir@portafolio.co
X: @pachomiranda
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