Andean Group - July 2009 (ISSN 1741-4466)

The finance minister, Oscar Zuluaga, has denied that the economy has gone into  recession even though it has registered two consecutive quarters of negative year-on-year growth according the national statistics institute (Dane): -0.6% in the first quarter of 2009 and -1% in the final quarter of 2008. Zuluaga noted that real GDP rose 0.2% quarter-on-quarter, however, between the fourth quarter of 2008 and the first quarter of 2009. The debate over the niceties of what constitutes a recession is academic. The economy is not in good shape - industrial output fell by a sizeable 7.9% year-on-year in the first quarter - but there are positive signs. Buoyed by an increase in the value of oil and gas exports, the mining and hydrocarbons sector bounced back to expand by 10.6%. Construction, boosted by government spending, was up 4.1%. Any recession would be the first for a decade. Zuluaga is confident that the economy will pick up in the second half of 2009, and said he felt no need to revise the government's growth forecast down from 0.5%-1.5%. One cause for concern, however, is that urban unemployment is on the increase: it rose to 14.9% in January, its highest level in three years.

Inflation: In June the consumer price index fell by 0.86%, having risen 0.01% in May. For the first six months the accumulated rate was -0.78%. The annual rate in June was 2.74%, well down on 7.67% in calendar 2008.