Growth is likely to be closer to 3%. Industrial production rose 3.6% in the first half of this year. Installed capacity usage is decent and orders have reached their highest level since 1994 and are expected to keep on rising, according to the Asociación Nacional de Industriales. Of Colombia's 29 industrial sectors, 18 have seen increases in production and sales. The best performances have come from industries centred on the domestic market: textiles, footwear, petrol derivatives, glass products, steel and iron. On the other hand, heavy industry (machinery and electrical products, and cars) as well as rubber and tobacco, contracted in the January to June period.
A survey taken at the end of the first half found that half those surveyed thought that the decent performance would continue into the second half: another 40% believe business will improve over the second half of the year. A mere 1.8% said they expected conditions to worsen in the coming months. The strong law and order pitch by the new president, Alvaro Uribe, has boosted confidence: businessmen now put security sixth on their list of concerns. Last year it was second.
Budget
The congressional finance commission has rejected the government's proposed budget for next year. The committee said that it was unclear how the government was going to finance the Col$77.6tr (US$26.7bn) budget. This is the first time in 10 years that the commission has rejected a budget. Its main reason for doing so is that a lot of the austerity measures still have to be approved by the referendum in October. The government will now have to take into account the commission's objections and present a new budget before 30 August. The proposals then have to receive congressional approval before 20 October.
* The government raised its economic growth forecast for this year, from 2.0% to 2.5%. Construction is leading the recovery with an expected 9.1% expansion this year. Manufacturing is expected to grow by 3.5%, communications by 3.7%, and agriculture by 2.4%.
Pointer: Although the unemployment rate increased to 14.2% in June compared to 13.0% in May, the rate was lower than the 16.0% reported in the same month of last year. It was also below the 14.8% rate for April. The government is expecting unemployment to fall by two percentage points by the end of this year, to around 14% by the end of the year.
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