Venezuela: Economy loses momentum in second quarter
August 25, 2011
In the second quarter, GDP grew 2.5% over the same quarter last year, based on preliminary estimates released by the Central Bank of Venezuela (Banco Central de Venezuela) on 25 August. The print represented a significant slowdown over the revised 4.8% expansion (previously reported: +4.5% year-on-year) seen in the first quarter and undershot last month's Consensus Forecast that had the economy growing 3.0%. Domestic demand moderated the pace by growing 5.0% year-on-year in the second quarter (Q1: +7.6% yoy), mainly due to a moderation in total consumption. Government spending led the slowdown, rising just 3.6% (Q1: +10.2% yoy) in the second quarter, while private consumption increased 2.8% (Q1: +4.8% yoy). Furthermore, fixed investment disappointed by recording an outright contraction of 3.6% (Q1: +2.7% yoy). Exports of goods and services jumped 7.9% in the second quarter (Q1: +5.8% yoy) due to higher oil prices, while imports expanded 12.4% (Q1: +15.0% yoy). As a result, the net contribution from the external sector to overall growth stepped up from minus 4.1 percentage points in the first quarter to minus 3.8 percentage points in the second. At the sector level, the slowdown registered in the second quarter was mainly due to slower growth in the non-oil sector (Q1: +5.3% yoy; Q2: +2.8% yoy), particularly in manufacturing and commerce. On the other hand, the oil sector expanded 0.8% over the same period last year (Q1: -0.5% yoy). Meanwhile, the construction sector continued to fall despite the government's commitment to build 153,000 dwellings this year.