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
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.