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Colombia economy grows 4.3 percent in 2013, beats expectations

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(Globalpost/GlobalPost)

By Peter Murphy and Nelson Bocanegra

BOGOTA (Reuters) - Colombia's economy grew 4.3 percent in 2013, one of the fastest rates in Latin America, beating market expectations on momentum driven by nearly a year of low interest rates.

The economy began 2013 sluggishly but finished the year with the strongest quarterly growth in six quarters, expanding 4.9 percent in the final three months of last year, Colombia's national statistics agency DANE reported on Thursday.

Full year growth came in slightly below the government's target of 4.5 percent but was stronger than analysts' expectations for 4.1 percent expansion.

Construction, agriculture and mining were among the strongest sectors in the Andean economy last year, DANE said. That follows a surge in foreign investment in the last few years on improved security after military offensives against leftist guerrillas.

Thursday's data did not change expectations that the central bank will maintain its benchmark interest rate at 3.25 percent for a 12th straight month when its board meets on Friday, analysts said.

"I think the Colombian economy is in a period of expansion that will consolidate in 2014. What we have seen is that private demand is staying solid," said Catalina Tobon, chief economist at finance group Old Mutual.

Camilo Perez, head of economic research at Banco de Bogota, said evidence the economy is picking up, as demonstrated by expansion near 5 percent in the last two quarters, may mean an eventual rise in interest rates could come sooner than current expectations for a July increase.

Fourth quarter growth versus the prior three months was 0.8 percent, helped by strong consumer demand. Retail sales in January rose 6.5 percent year-on-year, DANE said.

The agency revised its figure for 2012 growth down to 4 percent from 4.2 percent.

FOREIGN DEBT SALES

As monetary tightening by the United States' Federal Reserve prompts investors to exit emerging markets, Colombia's economy looks comparatively attractive in Latin America given robust growth coupled with low inflation and a reputation for investor friendliness.

The Colombian peso was the biggest mover among Latin American currencies on Thursday, strengthening 0.79 percent to 1,993 to the dollar and crossing below 2,000 pesos for the first time since January 24.

Foreign exposure to Colombia's economy could grow this year, after the head of public credit said the government was preparing reforms to boost sales of sovereign bonds to non-nationals. J.P. Morgan on Wednesday raised the weighting for Colombian debt in two of its emerging market bond indexes.

As monetary tightening by the United States' Federal Reserve prompts investors to exit emerging markets, Colombia's economy looks comparatively attractive in Latin America given robust growth coupled with low inflation and a reputation for investor friendliness.

Colombia has a large commodities sector, with rising oil output now measuring around 1 million barrels per day. The country is also the world's No. 4 thermal coal exporter and largest producer of washed, or mild, arabica coffee beans.

The country's industrial sector has been a weak spot despite the economy's steady growth, contracting 1.2 percent in 2013. Nonetheless, imports in January, the latest month for which data is available, fell 6.6 percent from that month of 2013.

(Additional reporting by Carlos Vargas and Luis Jaime Acosta; Writing by Peter Murphy; editing by Andrew Hay and Meredith Mazzilli)

http://www.globalpost.com/dispatch/news/thomson-reuters/140320/colombia-economy-grows-43-percent-2013-beats-expectations