Colombia economy likely grew more than forecast in Q2

Reuters) – Colombia’s economy likely grew more than expected in the second quarter of the year, Finance Minister Mauricio Cardenas said on Tuesday, while the exchange rate for the peso is now at a level the government has been seeking.

A Reuters poll of 31 analysts on Monday showed average expectations for the quarter’s annual growth were 3.3 percent, slower than the 4.7 percent expansion a year earlier.

The government will reveal second quarter GDP data on Thursday.

“(It) looks like the second quarter was better than first thought,” Cardenas told a local radio station, without offering a specific estimate.

“If you do a calculation based on the information that we already have in different sectors, there are reasons to be optimistic, but of course, there are many sectors about which we still don’t have information,” he added.

The GDP figure for the second quarter will be key for the central bank to weigh monetary policy next week. At least two of its seven-member board voted in favor of a cut in the benchmark interest rate at its August meeting due to slower-than-hoped-for growth.

Colombia’s key lending rate has been held steady at 3.25 percent for the last five months.

Colombia’s official growth target for 2013 is 4.5 percent. That now looks more difficult to achieve with headwinds from strikes and logistics disruption in the coal industry and protests in the farming sector which restricted the flow of goods along highways.

Turning to the exchange rate, Cardenas said that the peso is now within the range the government was seeking, between 1,900 and 1,950 to the U.S. dollar, casting doubt on whether the central bank will extend a dollar-buying program beyond end September.

The central bank has bought millions of dollars daily on the spot market to help stem gains in the currency.

“We already have the exchange rate at the level we want, so the truth is that under these conditions, intervention is harder to justify,” Cardenas said. “Also, interventions are expensive.”

The Colombian currency has depreciated 8.4 percent so far this year, after strengthening about 9 percent in 2012.

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