May 15, 2018 / 5:18 PM / in 7 months

UPDATE 1-Colombia economy grew 2.2 pct in Q1 on finance, public spending

(Adds details and background)

BOGOTA, May 15 (Reuters) - Colombia’s economy expanded 2.2 percent during the first quarter compared with the same period in 2017, the government’s statistics agency DANE said on Tuesday, below the 2.4 percent growth expected by the market.

Growth was driven by the finance and insurance sectors, which expanded 6.1 percent and by public spending, which increased by 5.9 percent.

The construction sector contracted by 8.2 percent, mining by 3.6 percent and industrial production by 1.2 percent.

Gross domestic product grew 0.4 percent during the first quarter when compared with the fourth quarter of 2017, below analysts’ estimate of 0.65 percent growth in a recent Reuters survey.

The economy expanded by 1.3 percent in the first quarter of 2017.

Colombia has spent more than two years grappling with 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.

Quicker-than-expected inflation for April may mean the central bank board holds off on further interest rate cuts, in a bid to ensure prices end the year within the bank’s target range, analysts said.

It remains to be seen if the slightly lower than estimated growth in the first quarter will push policymakers back toward cuts, in an effort to bolster expansion.

The bank’s technical team predicts the economy will expand 2.7 percent overall this year, while analysts predicted a less optimistic 2.5 percent in Reuters’ most recent poll.

This year DANE has revised the baseline for its GDP calculations. (Reporting by Carlos Vargas, Nelson Bocanegra; writing by Julia Symmes Cobb, editing by G Crosse)

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