By Brian Ellsworth and Eyanir Chinea
CARACAS Aug 22 Venezuela's economy grew 2.6 percent in the second quarter after tepid expansion in the previous three months, the central bank said on Thursday, but growth was still far below that seen in the same period in 2012 because of slower government spending.
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 shortages of some consumer goods.
The country's gross domestic product growth in the second quarter was far short of the 5.6 percent seen in the second quarter of 2012, but an improvement over the 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 in the data included 24.3 percent growth from a year ago in the financial sector and 5.7 percent in manufacturing - which shrank in the first quarter. Communication grew by 6.7 percent.
But the construction sector - which grew by 17.6 percent in the second quarter last year as a massive homebuilding program helped late socialist leader Hugo Chavez win re-election - shrank by 6 percent. The mining sector contracted by 22 percent.
Maduro's government has targeted 6 percent growth in GDP this year and a 15 percent increase in 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.
"The first seven months of the year saw a deceleration in state spending," said Asdrubal Oliveros, director of local think tank Ecoanalitica. "2014 could be a year of big changes and economic adjustments."
The central bank said later on Thursday that the country recorded a current account surplus of $1.835 billion during the second quarter, and a capital account deficit of $249 million.
The current account surplus was smaller than the $3.667 billion seen in the same period last year - a reduction which the bank attributed to a 3.3 percent rise in imports and a 5.4 percent decrease in the value of Venezuelan exports.
Oil exports amounted to $21.572 billion during the second quarter of this year, while non-oil exports were $810 million.
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.
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 drum beat 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.