* Inflation forecast to fall to 14-16 percent
* Heavy state spending underpinned 2012 growth
By Eyanir Chinea
CARACAS, Oct 23 Venezuela's economy is expected to grow 6 percent in 2013 and inflation will slow to between 14 percent and 16 percent, President Hugo Chavez's government said on Tuesday in its budget presentation to parliament.
Heavy state spending ahead of the Oct. 7 presidential election, when Chavez won a new six-year term, has underpinned growth this year, which his administration estimates will be around 5 percent, with inflation of 18 percent.
Most economists have been warning of a slowdown in the South American OPEC nation during 2013 as the stimulus eases.
"There will be a drag on growth next year, but Venezuela has the potential to grow at more than 6 percent," said Central Bank President Nelson Merentes.
Price controls this year have helped curb inflation, although it remains one of the highest rates in the world.
Finance Minister Jorge Giordani said the 2013 budget would be 396.4 billion bolivars, or $92.2 billion at the official exchange rate of 4.3 bolivars to the U.S. dollar.
That represented a 33.1 percent increase on this year's initial budget, although additional special credits are expected to take it to around 530 billion by the end of 2012.
The 2013 budget forecast an average crude oil price of $55 per barrel, but officials routinely underestimate that figure to allow fiscal flexibility. The average price of Venezuelan oil exports has been almost $105 per barrel this year.
Venezuela underwent two years of contraction in 2009 and 2010. Chavez says the global financial crisis was the cause, while critics say his socialist policies were to blame.
Giordani said the government planned to keep the official exchange rate of 4.3 to the dollar. Many local economists expect the authorities to order a devaluation next year.