(Bloomberg) -- Colombia's economy grew at its weakest pace in nearly a decade in 2017, capping a nightmare year for Finance Minister Mauricio Cardenas.
The economy expanded 1.8 percent, the least since the aftermath of the global financial crisis, the national statistics agency said Thursday, due largely to a slump in consumer confidence. On top of that, the nation's credit rating was cut for the first time since 2002, industry contracted, while inflation exceeded the upper limit of its target range for a third straight year.
“It was a very bad year,” said Munir Jaliil, Citibank's chief economist for the Andean region. “By Colombian standards, this was a recession.”
Consumer confidence sank to a record low at the start of 2017, after the government raised sales tax to replace revenues lost by the drop in crude prices. Corruption scandals centered around disgraced Brazilian construction giant Odebrecht contributed to the sensation that the country was doing badly, causing consumers to rein in their spending still further, Jalil said.
Gross domestic product expanded 1.6 percent in the fourth quarter from a year earlier, lower than the 1.8 percent median forecast of 27 analysts surveyed by Bloomberg. Output expanded 0.3 percent from the previous quarter.
Agriculture expanded 4.9 percent from a year compared to 2016, while financial services grew 3.8 percent. The construction sector, one of the main drivers of growth in recent years, contracted, as did industry.
The central bank has cut its policy rate by 3 percentage points since the end of 2016, as economic data continually disappointed. Cardenas said at the World Economic Forum in Davos last month that the worst for the economy is over and that he expects growth to pick up this year.
S&P Global Ratings cited the weak economy and the failure of tax increases to raise enough revenue when it cut the nation's credit rating to one notch above junk in December.
To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net.
To contact the editors responsible for this story: Giulia Camillo at gcamillo@bloomberg.net, Matthew Bristow
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