Venezuela: Economic activity accelerates strongly in Q2
August 22, 2013
In the second quarter, GDP expanded 2.6% over the same quarter last year, according to a preliminary estimate released by the Central Bank on 22 August. The print overshot the 0.5% increase observed in the first quarter - which had marked the weakest expansion since Q4 2010 - and contrasted the 0.6% decline market analysts had projected in last month's LatinFocus Consensus Forecast.
Economic growth in the second quarter mostly reflects an improvement in private consumption and a rebound in exports. Private consumption expanded 5.5% over the same quarter last year (Q1: +3.1% year-on-year), whereas government spending slowed to a 3.0% rise (Q1: +4.2% yoy). Gross fixed investment swung to a 2.9% contraction (Q1: +9.5% yoy), marking the sharpest drop since Q1 2010. GDP was also dragged down by a strong destocking process.
On the external front, exports of goods and services rebounded, expanding 0.5% (Q1: -7.3% yoy), while imports gained a meagre 0.1% (Q1: +1.6% yoy). As a result of the rebound seen in exports, the external sector's net contribution to overall growth improved from minus 1.9 percentage points in the first quarter to a zero contribution in the second quarter
Venezuela's 2013 budget assumes that the economy will grow 6.0% this year. LatinFocus Consensus Forecast panellists, however, are much less optimistic and expect GDP to expand only 0.4% this year, which is down 0.2 percentage points from last month's projection. Next year, the panel sees economic growth at 1.9%.