Venezuela: Economic activity cools down in Q3
November 26, 2013
In the third quarter, GDP expanded 1.1% over the same quarter last year, according to a preliminary estimate released by the Central Bank on 26 November. The print marked a sharp deceleration over the 2.6% increase tallied in the second quarter and undershot the 2.4% rise market analysts had expected.
The third quarter result mostly reflects a deterioration in domestic demand. Private consumption slowed to a 4.2% increase in the third quarter (Q2: +5.3% year-on-year), while government spending expanded 2.7% in the same period (Q2: +2.9% yoy). Gross fixed investment plummeted 14.4% in the third quarter (Q2: -2.5% yoy), marking the sharpest drop since Q1 2010.
On the external front, exports of goods and services declined 9.9% over the same period last year (Q2: +0.3% yoy). Meanwhile, imports contracted at the fastest pace since Q1 2010, falling 16.1% (Q2: -1.9% yoy). As a result of the sharp contraction in imports, the external sector's net contribution to overall growth improved from 0.9 percentage points in the second quarter to 7.2 percentage points in the third quarter.
The 2014 budget assumes that the economy will grow between 4.0% and 6.0% this year. LatinFocus Consensus Forecast panelists, however, are far more pessimistic and expect GDP to expand 0.9% this year, which is up 0.1 percentage points from last month's projection. Next year, the panel sees economic growth at 1.7%, which is down 0.2 percentage points over the previous month's estimate.