Venezuela: Recession likely to have ended in the final quarter
December 30, 2010
According to preliminary estimates released by the Central Bank on 30 December, GDP contracted 1.9% in the full year 2010 (2009: -3.3%). The reading, which will likely be revised in the months ahead, was better than last month's Consensus Forecast of a 2.5% contraction. While still contracting, the economy improved over the previous year, mostly as a result of milder declines in domestic demand. Private consumption dropped 2.8% (2009: -3.2%), which was partially offset by a 2.7% expansion in government consumption (2009: +2.3%). Moreover, gross fixed investment improved, experiencing a contraction of 4.8% (2009: -8.2%). On the external side, exports of goods and services shrank 12.5% (2009: -12.9%), while imports dropped a more moderate 5.5% (2009: -19.6%). As a result, the net contribution from the external sector to overall growth improved significantly from a detraction of 2.3 percentage points in 2009 to a positive contribution of 5.6 percentage points in 2010. At the sector level, the improvement was reflected in the oil sector, where the pace of decline slowed from a 7.2% drop to a 2.2% contraction. In addition, the non-oil sector also improved from a 2.0% contraction to a 1.8% decline. Although the Central Bank did not provide quarterly data, the annual figures suggest that the recession may have ended in the fourth quarter. Based on the preliminary annual data, GDP is likely to have recorded a flat annual reading in the final quarter, which would represent the best result since the second quarter of 2009. According to Elias Eljuri, president of the Statistics Institute, the economy should grow at least 2.0% in 2011.