Colombia's Q2 GDP Grows 3.5%, Strengthening Case for September Rate Hike

Colombia's economy expanded 3.5% in the second quarter compared with the same period last year, according to official data released on Tuesday. The growth was fueled by robust government spending and strong performances in services, utilities, and mining, reinforcing market expectations that the central bank may raise its benchmark interest rate from the current 12% in September.

On a seasonally adjusted basis, gross domestic product grew 1.3% quarter-on-quarter between April and June, accelerating from 0.6% in the first quarter and slightly exceeding market forecasts.

The statistics agency DANE reported that public administration, defense, education, and health sectors grew 10% year-on-year. Arts and entertainment rose 9.52%, utilities increased 4.8%, financial activity gained 4.3%, and mining expanded 4.2%.

The data strengthens the case for the central bank, known as BanRep, to resume its tightening cycle after holding its policy rate steady at 12% during its July meeting.

"The strong 1.3% quarter-on-quarter expansion in Colombian GDP in Q2, alongside continued above-target inflation, means that BanRep is likely to deliver an interest rate hike in September," said Kimberley Sperrfechter, senior emerging markets economist at Capital Economics.

Sperrfechter noted that growth was broad-based, with strong domestic demand pushing imports up 5.1% on the quarter, while falling exports pointed to a wider current account deficit.

Earlier this month, central bank staff raised their 2026 growth forecast to 2.5% from 2.4%. Fitch said on Tuesday it expects Colombia's economy to grow 2.7% this year before slowing to 2% in 2027.