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BOGOTA, Feb 22 (Reuters) - Colombia’s economy grew slightly more than expected in the fourth quarter and full year 2016, the government said on Wednesday, an improvement that will be taken into account when the central bank meets this week to consider moves to the interest rate.
Gross domestic product grew 1.6 percent in the fourth quarter versus a year ago, more than the 1.5 percent forecast by the market. In 2016, growth reached 2 percent, down from 3.1 percent in 2015 but more than the 1.8 percent expected by analysts.
Latin America’s fourth-largest economy has been hit by a slump in global oil prices and is struggling with a rise in inflation. Crude oil is Colombia’s biggest export and leading source of foreign currency.
Finance Minister Mauricio Cardenas has said this year’s growth will be better than last year‘s, and could reach as much as 2.5 percent or a little more.
The central bank has been facing high inflation and slowing economic expansion for months. The seven-member board has been split between those who want a cut in the lending rate to bolster growth and those who feel inflation is still too high to begin monetary easing.
Twelve-month inflation reached 5.47 percent in January. The measure has been above the central bank’s 2 percent to 4 percent target range since early 2016 due to a drop in the peso currency in the past year and rising food prices due to heavy rains.
The weather has since improved, helping to ease food price increases and bring inflation down. At one point last year 12-month inflation hit almost 9 percent.
During the fourth quarter, the financial services sector grew the most, up 5 percent, construction grew 3.5 percent and agriculture expanded 2 percent.
Mining dropped 8.2 percent, energy and water services slipped 0.5 percent and transport and communications slipped 0.1 percent. (Reporting by Helen Murphy, Luis Jaime Acosta, Nelson Bocanegra and Carlos Vargas; Editing by Chizu Nomiyama and Meredith Mazzilli)