Venezuela: Economy returns to growth in fourth quarter
February 25, 2011
In the fourth quarter, GDP grew 0.6% over the same period last year. The figure represents an improvement over the revised flat result of the previous quarter and was the first positive growth recorded since Q1 2009. For the full year 2010, the Venezuelan economy contracted 1.4%, after shrinking a more severe 3.3% over 2009. Domestic demand led the recovery, expanding 7.1% year-on-year in the fourth quarter (Q3: +4.5% yoy), while the external sector sunk as surging imports widened the trade deficit. Meanwhile, the private sector worsened in Q4, dropping 0.9% (Q3: -0.5% yoy), which represented the eighth consecutive quarter of negative growth. On the other hand, the public sector grew 2.6% (Q3: +0.8% yoy), amid public spending increases. On the downside, investment contracted and stockpiling continued. Exports contracted 5.5% in the fourth quarter (Q3: -17.3% yoy), while imports surged 21.8% after a third quarter expansion of 6.7%. As a result, the net contribution from the external sector to overall growth worsened, deepening from minus 5.5 percentage points in the third quarter to minus 7.7 percentage points in the fourth. At the sector level, the Q4 improvement was mostly driven by the oil sector (Q4: +1.8% yoy; Q3: -0.3% yoy), which was backed by stronger global demand and rising oil prices. On the other hand, weaker conditions in the mining, construction, and manufacturing sectors weighed on the overall result. According to the Central Bank, the economy is likely to continue to recover this year, and the authorities expect GDP to expand 2.0% in 2011.