GDP growth rises in the fourth quarter

Economy grows more than expected: The economy ended 2024 on a stronger footing, with annual GDP growth rising to 2.3% in Q4 from 2.1% in Q3, marking the fastest rise since Q1 2023. The Q4 figure was marginally above both Central Bank and market projections. As a result, economic growth accelerated to 1.7% overall in 2024 (2023: +0.7%) but remained below the 2014–2023 average of 2.8%. On a seasonally adjusted quarter-on-quarter basis, economic growth accelerated to 0.6% in Q4 from the previous period's 0.3%.

Domestic demand underpins upturn: Domestically, fixed investment was the main contributor to annual GDP growth, rising by 10.5% (Q3: +3.8% yoy) and marking the best reading since Q3 2022. Moreover, sturdy real wage growth, ongoing monetary policy easing and a tighter labor market bolstered private spending, which expanded 1.8% in Q4, above the prior quarter’s 1.5% increase. Meanwhile, public expenditure continued to shrink at the tail end of 2024 as the government sought to contain its fiscal shortfall; still, it fell at a softer pace of 1.8% (Q3: -3.7% yoy). On the external front, exports of goods and services growth waned to 2.0% in Q4 (Q3: +2.5% yoy). Similarly, imports of goods and services growth edged down to 10.7% in Q4 (Q3: +12.8% yoy). Overall, net trade remained a major drag on GDP growth.

Economy to accelerate in 2025 but marginally miss pre-Covid trend: Our panel expects the economy to be expanding at a broadly similar year-on-year pace to Q4 in Q1: A faster increase in private spending and a rebound in public spending should offset slowdowns in fixed investment and exports. Economic growth will then pick up steam in H2, fueled by interest rate cuts and lower inflation. As a result, our Consensus is for the economy to accelerate from 2024 levels in 2025. Still, GDP growth will remain subdued by pre-pandemic standards, weighed down by slower momentum in the U.S.—Colombia’s top trading partner—and a weaker hydrocarbons sector. Moreover, risks are tilted to the downside, and include budget and energy crises—the latter resulting from underinvestment in the hydrocarbons sector, disruptions to hydroelectric output and rebel attacks on oil infrastructure—plus political and social unrest. U.S. trade policy is key to monitor.

Panelist insight: Credicorp Capital’s Daniel Velandia and Diego Camacho Alvarez commented: “We continue to expect households’ spending to maintain a recovery trend […]. That said, […] we expect private investment to continue to post a very gradual recovery amid heightened regulatory and political risk and still elevated interest rates. Likewise, public spending is expected to be moderate amid current fiscal challenges.” Santiago Tellez, analyst at Goldman Sachs, added: “The impulse from a very strong harvest has faded, but commerce activities remain dynamic, services resilient, and manufacturing is showing incipient signs of bottoming out. […] Still elevated domestic policy uncertainty will weigh on growth. Depressed housing investment and slowing of the flow of US workers remittances are the main downside risk to our growth forecast.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Colombian government consumption projections for the next ten years from a panel of 25 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable government consumption forecast available for Colombian government consumption.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Colombian government consumption projections.

Want to get access to the full dataset of Colombian government consumption forecasts? Send an email to info@focus-economics.com.