(Adds 2015, 2016 GDP forecasts)
By Nelson Bocanegra and Peter Murphy
BOGOTA, June 12 (Reuters) - Colombia’s economy grew 2.8 percent in the first quarter from a year earlier, the government said on Friday, in line with analysts’ expectations but the slowest quarterly growth in two and a half years as lower oil prices put a brake on expansion.
Finance Minister Mauricio Cardenas hailed the result as the fastest first-quarter growth among Latin America’s six biggest economies and said it was notable given it came on top of 6.4 percent expansion in the first quarter last year.
Latin America’s fourth-largest economy expanded 0.8 percent in the first quarter from the previous three-month period, national statistics agency DANE said.
Civil construction remained one of the main growth drivers, government data showed, growing 4.9 percent from the same quarter last year while financial services grew 4.4 percent. Manufacturing contracted 2.1 percent and mining 0.1 percent.
“It’s a good showing, in line with what was expected given the context, and it supports our forecast that the economy will grow around 3.3 percent this year,” said Camilo Perez, head of research at the Banco de Bogota.
He said he expects the central bank to hold interest rates steady at 4.5 percent for the rest of the year.
Later on Friday, Cardenas announced a government 2015 gross domestic product growth target of 3.6 percent. Previously the government had forecast an increase between 3.5 and 4 percent because oil price volatility made predictions difficult.
The government also gave an initial target for 2016 GDP growth of 3.8 percent.
Last year’s halving of the price of crude oil, the Andean country’s top export, has slowed growth and government spending and will lead to a wider government deficit this year, Cardenas said this week.
UK-based Capital Economics said in a bulletin it expected the pace of Colombia’s growth to continue to weaken, with the full impact of lower oil prices likely to be more fully felt later in the year.
It said there was still no evidence the peso’s one-third decline versus the dollar during the last 12 months was helping the manufacturing sector by spurring exports.
On top of 1 million barrels daily oil output, Colombia is the world’s fourth-biggest coal exporter and top producer of mild, washed arabica coffee.
Growth and foreign investment surged in the last decade due to improved security as a military offensive slashed the ranks of leftist guerrillas who have been fighting the government for five decades. (Additional reporting by Carlos Vargas and Julia Symmes Cobb, Writing by Peter Murphy; Editing by Chizu Nomiyama and Alan Crosby)