Venezuela: Economy picks up in third quarter
November 17, 2011
In the third quarter, GDP grew 4.2% over the same quarter last year, based on preliminary estimates released by the Central Bank of Venezuela (Banco Central de Venezuela) on 17 November. The print represented a significant acceleration over the 2.5% increase seen in the second quarter and overshot last month's Consensus Forecast that had the economy growing 2.9%. With the Q3 outturn, the Venezuelan economy has completed a full year of positive economic growth, after an 18-month recession. Domestic demand was the main growth engine, jumping 8.9% year-on-year in the third quarter (Q2: +4.2% yoy). Total consumption improved in the third quarter, with private consumption rising 4.2% (Q2: +2.7% yoy) and government spending growing 4.7% (Q2: +4.7% yoy). Furthermore, fixed investment rebounded, albeit increasing only a paltry 0.4% over the same quarter last year (Q2: -2.2% yoy). On the external front, import growth continued to outpace that of exports, thus prompting a deterioration in the external sector's net contribution to overall growth from minus 2.8 percentage points in the second quarter to minus 7.1 percentage points in the third. Exports of goods and services rose 6.7% in the third quarter (Q2: +7.8% yoy), while imports soared 19.7% (Q2: +9.8% yoy). At the sector level, the improvement was mainly due to faster growth in the non-oil sector (Q2: +2.7% yoy; Q3: +4.4% yoy), particularly in the financial institutions and insurance category, as well as in the construction sector, which is currently boosted by the so-called Great Housing Mission launched in April this year. On the other hand, the oil sector remained subdued and added only 0.3% over the same period last year (Q2: +0.8% yoy). Analysts expect that economic growth will pick up in the coming quarters, propelled by high oil revenue and massive fiscal spending ahead of the 7 October 2012 presidential election.