Venezuela: Economic activity slows sharply in Q1
May 31, 2013
In the first quarter, GDP expanded 0.7% over the same quarter last year, based on a preliminary estimate released by the Central Bank on 31 May. The print was only a fraction of the 5.5% increase observed in the last quarter of 2012 and slightly undershot the 0.9% rise projected by last month's LatinFocus Consensus Forecast. The result represents the weakest expansion seen since Q4 2010.
Economic growth in the first quarter mostly reflects depressed domestic demand, which grew only 1.8% over the same quarter last year (Q4 2012: +11.6% year-on-year). Growth in both private consumption (Q4: +7.1% yoy; Q1: +3.2% yoy) and public spending (Q4: +6.5% yoy; Q1: +4.1% yoy) slowed down to their lowest pace since Q2 2011. In addition, gross fixed investment decelerated sharply from a whooping 32.9% rise in the fourth quarter to a 9.6% increase in the first.
On the external front, exports fell 7.5% (Q4: +7.5% yoy), while imports virtually halted to a 1.1% increase (Q4: +24.7% yoy). As a result of the moderation seen in imports, the external sector's net contribution to overall growth improved from minus 9.8 percentage points in the fourth quarter to minus 1.7 percentage points in the first.
The 2013 budget assumes the economy will grow 6.0% this year. LatinFocus Consensus Forecast panellists, however, are much less optimistic and expect GDP to expand only 1.3% this year, which is down 0.2 percentage points from last month's projection. Next year, the panel sees economic growth at 2.5%.
Author: Ricardo Aceves, Senior Economist