August 15, 2018 / 4:59 PM / 7 months ago

UPDATE 1-Colombia's economy grew 2.8 pct in second quarter versus year ago

(Adds details on growth)

BOGOTA, Aug 15 (Reuters) - Colombia’s economy expanded a more-than-expected 2.8 percent in the second quarter versus the same period last year, the government said on Wednesday, indicating that months of rate cuts by the central bank may be boosting recovery.

Expansion was 0.6 percent in the second quarter compared with the first quarter, the state statistics agency DANE said. Second quarter growth in 2017 was 1.7 percent.

The market had expected a 2.55 percent increase in gross domestic product during the quarter.

Growth was driven by professional, scientific and technical activities, which rose 6.6 percent, the agriculture sector, up 5.9 percent, and by public spending, which increased by 5.3 percent. Manufacturing was 3.7 percent higher than a year ago.

On the downside, the construction sector contracted by 7.6 percent and mining fell by 2.7 percent.

Last week, Colombia’s new finance minister Alberto Carrasquilla said that the economy was not satisfactory and faced some complicated fiscal problems.

Carrasquilla, who replaced Mauricio Cardenas, is at the sharp end of recently-elected President Ivan Duque’s drive to bolster economic growth, reform the tax code and strengthen the middle class.

He faces a tough time. Colombia has spent more than two years grappling with the fallout from a decline in global oil prices, as well as worries about inflation, which only recently slowed back to within the central bank’s target range of 2 percent to 4 percent.

The central bank predicts the economy will expand 2.7 percent overall this year.

This year DANE has revised the baseline for its GDP calculations. (Reporting by Carlos Vargas, Nelson Bocanegra, Helen Murphy and Julia Symmes Cobb Writing by Helen Murphy, Editing by Rosalba O’Brien)

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