Second quarter GDP 2025: Construction and oil detracted from growth

Contrary to market expectations, the Colombian economy closed the second quarter of this year with a modest balance, growing 2.1% annually, according to preliminary figures published by DANE on Friday, August 15.

While this figure marks an upturn from the 1.7% observed for the same period in 2024, it fell short of market expectations, which largely predicted growth above 2.5%. Furthermore, the momentum continues to depend on a few drivers, primarily household consumption and the dynamism of trade and services; while mining and construction continue to be the major drags on productive activity.

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In seasonally and calendar-adjusted terms, Gross Domestic Product (GDP) grew by 2.5% annually and 0.5% compared to the first quarter, confirming a moderate growth trajectory that has been ongoing for more than a year. The cumulative growth for the first half of the year stood at 2.4%, placing the country on an intermediate path compared to the eurozone and several OECD economies, although below its estimated potential.

Trade continues to pull

Reviewing these data, broken down by sector, it's clear that three major activities accounted for a large part of the second-quarter expansion, starting with trade, transportation, accommodation, and food services, which grew 5.6% annually and contributed 1.1 percentage points to GDP.

Within this group, retail and wholesale trade (+8.8%) and air transport (+14.0%) stood out, although accommodation and restaurants barely recovered by 1.4% after several weak quarters.

Meanwhile, agriculture, livestock, hunting, forestry, and fishing grew 3.8%, with strong contributions from livestock (+8.1%) and fishing (+25%). This confirms the positive momentum of this sector, although coffee, which had been a key player in recent months, fell 15.8% this time, weakening the overall economy. Overall, all agriculture contributed 0.4 percentage points to GDP.

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Public administration, education, and health, which had also been key drivers of the economy, grew by just 1.8% this time, equivalent to 0.3 percentage points of national growth. Within the group, market and non-market education performed positively, while health grew marginally.

Finally, other sectors such as artistic and recreational activities (+7.5%), real estate (+2.0%), and financial (+2.8%) contributed more moderately. While they performed acceptably, they once again raise the debate about the slow pace of GDP growth and the lack of a recovery plan.

Two anchors for growth

Turning to the negative aspects of the DANE report, it's worth highlighting that in the second quarter of 2025, GDP growth was constrained by two key sectors: mining and construction; the latter being the biggest surprise, as a better balance was expected to be achieved in the April-June period.

On this occasion, the statistical authority reported that mining and quarrying operations fell 10.2%, affected by lower global demand, price volatility, and internal licensing issues; while coal, metallic minerals, and oil registered significant declines, subtracting half a percentage point from the country's economic performance.

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Construction also posted negative figures, with an annual decline of 3.5%; housing fell 10.6% and buildings 9.7%, reflecting the weakness of the real estate sector. Only civil engineering showed significant growth, with a 9.6% increase thanks to public infrastructure projects. Even so, the net effect of the sector on GDP was negative, subtracting 0.2 percentage points from the total.

In contrast, manufacturing industries achieved a slight increase of 0.9%, with growth in textile and food production partially offsetting declines in metallurgy and petroleum refining. This reflects a weak recovery dependent on specific segments, while other industrial subsectors continue to face adverse conditions in the domestic and foreign markets .

Investment at low levels

DANE also reported that on the expenditure side, domestic demand grew 4.2%, driven by household consumption and public spending, while private consumption grew 3.7%, with the most notable increases in durable and semi-durable goods, recreation, transportation, and apparel.

Meanwhile, government spending rose 3.9%, led by collective and individual non-market spending, although government market purchases declined.

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Regarding investment, it should be noted that the second quarter showed moderate growth of 1.7%, which reiterates the modest progress of this indicator, which just a year ago exceeded 4%.

The purchase of machinery and equipment rebounded strongly, growing 11.6%, a sign of modernization and increased capacity in some productive sectors. However, investment in housing plummeted 10.6%, and investment in other buildings fell 1.2%, reflecting the impact of high interest rates and the weakness of the construction sector.

External deficit on the rise

DANE data reported that foreign trade once again weighed heavily on GDP, with exports falling 1.6% while imports grew 9.7%, widening the goods and services deficit from 22.1 trillion pesos in the second quarter of 2024 to 33.1 trillion pesos in the same period of 2025.

The strong influx of imported goods, especially consumer goods and transportation equipment, contrasts with external sales affected by lower raw material prices and weakness in key markets.

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Thus, it can be said that the sector's performance in the second quarter reflects a two-speed economy, with one segment oriented toward domestic consumption, benefiting from falling inflation, rising real income, and recovering consumer confidence; while the other, dependent on housing investment and natural resource exports, continues to lag behind due to structural factors. Meanwhile, agriculture, trade, and services are sustaining growth, but the decline in mining and weakness in construction and heavy industry are limiting global expansion. DANIEL HERNÁNDEZ NARANJO

Portfolio Journalist