Venezuela: Recent data corroborate economic recession in Venezuela
December 30, 2014
GDP contracted 2.3% in Q3, which followed the 4.9% drop tallied in Q2 and the 4.8% decline observed in Q1, according to economic figures released by the Central Bank on 30 December. These data, which represented the first official GDP figures published for 2014, confirm that the Venezuelan economy entered into recession last year.
The quarterly reading reflected a less negative contribution from domestic demand, while the external sector deteriorated. Private consumption fell 1.6% in Q3 (Q2: -4.3% year-on-year), while government consumption expanded 2.0% (Q2: 0.0% yoy). Although fixed investment experienced a severe 9.3% drop in Q3, it was an improvement compared to the 18.0% contraction tallied in the previous quarter.
On the external side of the economy, exports of goods and services improved from an 8.9% contraction in Q2 to a 2.7% drop in Q3. In addition, imports fell 5.2% over the same quarter in annual terms, which was up from the sharp 18.4% decrease observed in the previous quarter. As a result, the external sector’s net contribution to overall economic growth fell from 7.1 percentage points in the second quarter to 2.0 percentage points in the third quarter.
While economic activity in the oil sector was broadly stable in Q3 and registered a 0.3% increase (Q2: +0.4% yoy), the downward trend in the non-oil businesses eased somewhat (Q2: -4.7 yoy; Q3: -2.5% yoy).
Author: Dirina Mançellari, Senior Economist