Venezuela’s gross domestic product expanded at the quickest pace in almost three years in the first quarter as government spending backed by higher oil prices helped the economy emerge from Latin America’s longest recession faster than expected.
The country’s GDP rose 4.5 percent in the first three months of the year from the same period in 2010, the central bank said today in an e-mailed statement. Growth was more than twice as fast as the 1.7 percent median estimate of eight economists surveyed by Bloomberg.
The rise in the price of oil to the highest level since 2008 has increased Venezuela’s revenue even as its oil sector contracted. First-quarter growth was the fastest since the 7.2 percent expansion posted in the second quarter of 2008 and should bolster President Hugo Chavez’s popularity ahead of next year’s elections, said Finance Minister Jorge Giordani.
“Venezuela is turning the page and is in recovery,” Giordani said today during a press conference in Caracas. “Growth will contribute to President Chavez’s leadership in the 2012 elections.”
Domestic Demand
Imports rose 22 percent in the first three months of the year, boosting internal demand as more foreign currency was made available to businesses through the Foreign Exchange Board, known as Cadivi, and the central bank administered currency market, known as Sitme, according to a central bank report released today.
Leading the first-quarter jump in growth, commerce expanded 10.4 percent in the January-through-March period from a year earlier while manufacturing rose 7.6 percent.
The construction sector shank 7.7 percent even as Chavez launched a campaign to eradicate Venezuela’s housing deficit of 2 million homes. Oil, the main driver of Venezuela’s economy, declined 1.8 percent.
Venezuela posted a current account surplus of $7.5 billion in the first quarter, the central bank said. The capital account posted a deficit of $10.5 billion in the first three months of the year, according to the central bank.
‘One Element’
The central bank revised 2010’s first-quarter GDP to a contraction of 5.1 percent from a negative 4.79 percent. The low base of comparison is partly reflected in this quarter’s figures, said Juan Pablo Fuentes, Latin America Economist at Moody’s Analytics Inc.
“This reflects a strong expansion in spending, which has been possible due to the rise in oil prices,” Fuentes said in a phone interview from West Chester, Pennsylvania. “An economy that sustains itself from basically one element, which is government spending, is extremely fragile and risky.”
Venezuela’s economy contracted in the second quarter of 2009 after oil prices had fallen to a low of $31.36 in December 2008 from a high of $126.46 the previous July. GDP contracted 1.7 percent in 2010.
Venezuela will grow more slowly this year than any other major economy in Latin America, according to the International Monetary Fund. Venezuela’s economy will expand 1.8 percent in 2011 compared with an average of 4.8 percent in South America, the IMF said in its World Economic Output report.
Venezuela, South America’s biggest oil producer, was the last country in the region to emerge from recession after the global financial crisis.
Growth Horizon
Chavez said on April 6 that GDP may expand 3 percent to 4 percent this year on higher oil prices.
The government, which controls the sale of dollars at the official rates of 4.3 bolivars per dollar and 5.3 per dollar as part of currency controls introduced in 2003, increased outlays 12.3 percent in the first two months of 2011, Chavez said.
The government plans to spend 30 billion bolivars ($7 billion) as it seeks to build 153,000 new homes this year to eradicate a housing deficit. It will spend 16 billion bolivars on agriculture and $4 billion in electricity projects, Chavez said.
The central bank will lower reserve requirements by 3 percentage points to 14 percent, freeing up about 10 billion bolivars ($2.33 billion) that banks can lend for housing construction, bank President Nelson Merentes said May 3.
The government on Jan. 1 devalued the currency for the second time in a year by eliminating the preferential rate on so-called essential goods such as food and medicine by 40 percent, to 4.3 bolivars per dollar from 2.6, unifying its two fixed foreign exchange rates in a bid to pull the economy out of recession.
Inflation, as measured by the national consumer price index, rose 1.4 percent in April from a month earlier, according to the central bank, and 22.9 percent from April 2010, the biggest year-on-year increase among 78 economies tracked by Bloomberg.
Source: www.bloomberg.com
The country’s GDP rose 4.5 percent in the first three months of the year from the same period in 2010, the central bank said today in an e-mailed statement. Growth was more than twice as fast as the 1.7 percent median estimate of eight economists surveyed by Bloomberg.
The rise in the price of oil to the highest level since 2008 has increased Venezuela’s revenue even as its oil sector contracted. First-quarter growth was the fastest since the 7.2 percent expansion posted in the second quarter of 2008 and should bolster President Hugo Chavez’s popularity ahead of next year’s elections, said Finance Minister Jorge Giordani.
“Venezuela is turning the page and is in recovery,” Giordani said today during a press conference in Caracas. “Growth will contribute to President Chavez’s leadership in the 2012 elections.”
Domestic Demand
Imports rose 22 percent in the first three months of the year, boosting internal demand as more foreign currency was made available to businesses through the Foreign Exchange Board, known as Cadivi, and the central bank administered currency market, known as Sitme, according to a central bank report released today.
Leading the first-quarter jump in growth, commerce expanded 10.4 percent in the January-through-March period from a year earlier while manufacturing rose 7.6 percent.
The construction sector shank 7.7 percent even as Chavez launched a campaign to eradicate Venezuela’s housing deficit of 2 million homes. Oil, the main driver of Venezuela’s economy, declined 1.8 percent.
Venezuela posted a current account surplus of $7.5 billion in the first quarter, the central bank said. The capital account posted a deficit of $10.5 billion in the first three months of the year, according to the central bank.
‘One Element’
The central bank revised 2010’s first-quarter GDP to a contraction of 5.1 percent from a negative 4.79 percent. The low base of comparison is partly reflected in this quarter’s figures, said Juan Pablo Fuentes, Latin America Economist at Moody’s Analytics Inc.
“This reflects a strong expansion in spending, which has been possible due to the rise in oil prices,” Fuentes said in a phone interview from West Chester, Pennsylvania. “An economy that sustains itself from basically one element, which is government spending, is extremely fragile and risky.”
Venezuela’s economy contracted in the second quarter of 2009 after oil prices had fallen to a low of $31.36 in December 2008 from a high of $126.46 the previous July. GDP contracted 1.7 percent in 2010.
Venezuela will grow more slowly this year than any other major economy in Latin America, according to the International Monetary Fund. Venezuela’s economy will expand 1.8 percent in 2011 compared with an average of 4.8 percent in South America, the IMF said in its World Economic Output report.
Venezuela, South America’s biggest oil producer, was the last country in the region to emerge from recession after the global financial crisis.
Growth Horizon
Chavez said on April 6 that GDP may expand 3 percent to 4 percent this year on higher oil prices.
The government, which controls the sale of dollars at the official rates of 4.3 bolivars per dollar and 5.3 per dollar as part of currency controls introduced in 2003, increased outlays 12.3 percent in the first two months of 2011, Chavez said.
The government plans to spend 30 billion bolivars ($7 billion) as it seeks to build 153,000 new homes this year to eradicate a housing deficit. It will spend 16 billion bolivars on agriculture and $4 billion in electricity projects, Chavez said.
The central bank will lower reserve requirements by 3 percentage points to 14 percent, freeing up about 10 billion bolivars ($2.33 billion) that banks can lend for housing construction, bank President Nelson Merentes said May 3.
The government on Jan. 1 devalued the currency for the second time in a year by eliminating the preferential rate on so-called essential goods such as food and medicine by 40 percent, to 4.3 bolivars per dollar from 2.6, unifying its two fixed foreign exchange rates in a bid to pull the economy out of recession.
Inflation, as measured by the national consumer price index, rose 1.4 percent in April from a month earlier, according to the central bank, and 22.9 percent from April 2010, the biggest year-on-year increase among 78 economies tracked by Bloomberg.
Source: www.bloomberg.com
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