December 19, 2013 / 5:43 PM / 6 years ago

UPDATE 2-Colombia GDP grew 5.1 pct in Q3, beats expectations

* Central bank likely to hold interest rate steady

* Construction drove growth, manufacturing remains weak

* Government sticks with 4.5 pct 2013 expansion target (Adds comment from finance minister)

By Helen Murphy and Nelson Bocanegra

BOGOTA, Dec 19 (Reuters) - Colombia’s economy grew by a faster-than-expected 5.1 percent in the third quarter, compared with the same period of 2012, the government said on Thursday, supporting the market view that the central bank will hold borrowing costs steady for a ninth straight month.

The figure also brings economic growth closer to the government’s goal of 4.5 percent for the year. In a Reuters poll this week, 31 analysts estimated the growth rate for the July-September period at 4.37 percent, well below what was achieved.

The pace of growth, announced by the government’s statistics agency, raises the likelihood that central bank policymakers will hold the bank’s key interest rate at 3.25 percent on Friday, at least into early next year.

The minutes of the bank’s last monetary policy meeting in November raised the possibility that it might cut lending rates if the economy did not show signs of improvement.

“This is very solid, and the number makes one think that the central bank will start raising the interest rate soon,” said Camilo Perez, an economist at Banco de Bogota.

Driving growth, which was faster than the 3.9 percent achieved in the second quarter, were the construction and agriculture sectors, while the biggest drag remained manufacturing, which has been a weak performer this year.

The government revised down its second quarter number for growth in gross domestic product from 4.2 percent.

Colombian President Juan Manuel Santos, who will seek a second term in elections next May, welcomed the growth figure.

"The third-quarter GDP growth of 5.1 percent confirms the sturdiness of the economy and that we are on the right track," Santos said on his Twitter account (

The economy would need to expand at about 6 percent in the fourth quarter to reach the government’s target expansion rate of 4.5 percent for 2013, according to Daniel Lozano, economist at Bogota-based brokerage Serfinco.

There had been a certain amount of gloom about economic growth prospects after a series of labor disputes and stoppages this year in the key coal mining sector as well as a nationwide agricultural protest, which blocked highways and restricted the movement of goods.

“The truth is, I see Colombia’s economic scenario as very favorable. It’s not easy in the world today to grow 5 percent,” Finance Minister Mauricio Cardenas said after the data was released. “I don’t see many factors to worry about or many cloudy elements.”

Among individual sectors, construction had the fastest expansion at 21.3 percent against the same period a year earlier. The agriculture sector, including timber and fishing, came next with growth of 6.6 percent, while mining rose 6.1 percent and financial services 4.9 percent.

Exports rose 1.9 percent in the quarter, but imports rose an even faster 2.9 percent versus the same three months of last year. The manufacturing sector, which has been the laggard in the economy all year, contracted 1 percent.

A roughly 40 percent year-on-year leap in production of coffee, the Andean country’s most valuable crop, helped bolster the farming sector.

Ratings agency Fitch raised Colombia’s foreign currency sovereign credit rating on Dec. 10 to BBB from BBB-minus, citing the country’s improving debt dynamics and “credible and consistent” policies. (Editing by G Crosse; and Peter Galloway)

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