By Brian Ellsworth and Eyanir Chinea
CARACAS Aug 22 Venezuela's economy rebounded in
the second quarter from tepid growth in the previous three
months, the central bank said on Thursday, but growth was still
far below the expansion of the same period in 2012 due to slower
The figures are good news for President Nicolas Maduro, who
has faced a number of economic problems since his election in
April, including annualized inflation rising to 43 percent and
annoying shortages of consumer goods.
Government officials said growth of 2.6 percent compared
with the same period last year was evidence that the country's
economy was on solid ground after lackluster growth of 0.5
percent in the first quarter.
"For those who insisted that we were going to enter a period
of contraction, the reality is showing the opposite," Finance
Minister Nelson Merentes told a news conference.
Bright spots included 24.3 percent growth in the financial
sector, 5.7 percent in manufacturing, which shrank in the first
quarter, and 6.7 percent growth in communications.
But the construction sector, spurred last year by a massive
homebuilding program that helped late socialist leader Hugo
Chavez win re-election, shrank by 6 percent, while activity in
the mining sector contracted a whopping 22 percent.
As a result, growth in gross domestic product in the second
quarter GDP fell far short of the 5.6 percent seen in the second
quarter of 2012.
Maduro's government has targeted 6 percent growth in GDP
this year and a 15 percent increase inflation. Merentes said
those figures will be updated in the coming weeks when the
government presents its 2014 budget to Congress.
The economy has been hampered this year as heavy social
spending in 2012 has given way to a steep drop-off in state
outlays under Maduro.
A slowdown in the ambitious home-building program, which put
hundreds of thousands of families in new apartments and helped
Chavez win re-election five months before his death from cancer,
has been a key factor in the construction sector slowdown.
Critics say the effort provided an unsustainable stimulus to
the economy. They also say the rapid expansion of the banking
sector is driven by heavy government issue of bonds, rather than
by productivity growth.
Though Thursday's figures showed a notable expansion in the
manufacture of food, consumers complain regularly they cannot
find products, including wheat flour and corn flour, and the
central bank's scarcity index remains near historic highs.
Chavez's model of using abundant oil revenue to fund popular
social programs and expand state control over the economy helped
him repeatedly win elections and turned him into a symbol of the
resurgence of Latin America's left.
But Venezuela's private sector weakened during his 14-year
rule in a steady drumbeat of nationalizations and state
takeovers that left many business leaders unwilling to invest in
expanding or maintaining operations.
Chavez's model of socialism relied on constantly rising oil
prices to finance a growing import bill.
Even with the price of crude above $100 per barrel, the
government relied heavily on expansion of the money supply to
maintain social spending. Monetary liquidity has risen 39
percent in the last 12 months, according to the central bank.