(Updates with quote from central bank president in third paragraph.)
Dec. 30 (Bloomberg) -- A surge in government spending helped Venezuela’s economy, the third-largest in South America, grow 4 percent in 2011 after two years of contraction, the nation’s central bank said.
Expansion was propelled by government construction projects and a recovery in the manufacturing sector, the central bank said today in a report, citing preliminary figures. Official gross domestic product data will be released in late February.
“The recent performance of the Venezuelan economy ratifies the recovery of various productive sectors and allows us to be optimistic about sustained economic growth,” central bank president Nelson Merentes said today in an e-mailed statement.
The resolution of a power shortage, which caused manufacturing to collapse in 2010, boosted the economic recovery, Merentes said. Government spending rose 6 percent and the amount of dollars available in the economy rose 12.7 percent, according to the report.
President Hugo Chavez is preparing for his re-election bid in October. Spending this year has been buoyed by an average oil export price of more than $100 a barrel this year, the highest on record, and more than $17 billion of dollar bonds issued by the government and state oil company Petroleos de Venezuela SA. Chavez has used this cash to expand social programs and fund housing projects.
Government spending will probably accelerate in 2012, pushing growth to as much as five percent, according to a Bank of America report published on Dec. 27.
Non-oil sector GDP rose 4.3 percent this year and oil sector GDP increased 0.6 percent, according to the Central Bank. The country’s manufacturing sector grew 3.5 percent this year and construction GDP increased 3.4 percent.
Imports rose 7 percent in 2011 to $45.6 billion, while oil exports in dollar terms increased 27 percent to $89.3 billion, according to the report.
Venezuela’s current account surplus widened to $31.5 billion from $12.0 billion in 2010, and oil production rose 0.5 percent during the year, Merentes said, according to the statement.
Venezuela, South America’s largest oil producer and a founding member of OPEC, experienced economic contraction of 3.3 percent in 2009 and 1.4 percent in 2010.
Consumer prices climbed an estimated 27.6 percent over the year compared to an increase of 27.2 percent in 2010, the central bank said. The increase in inflation was caused by a devaluation of the Venezuelan bolivar in late 2010 and supply shortages of consumer goods, according to the report.
Foreign direct investment in Venezuela rose $2.75 billion in 2011, while private consumption increased 3.7 percent, the central bank said.
Merentes said on Dec. 21 that the economy will probably grow between four and six percent in 2012.
The United Nations’ economic unit for Latin America and the Caribbean, known as Cepal, said on Dec. 21 that Venezuela’s economy may grow 3 percent in 2012. That would be the third lowest in the region after El Salvador and Cuba.
--With assistance from Jose Orozco and Daniel Cancel in Caracas. Editor: Jonathan Roeder
To contact the reporters on this story: Nathan Crooks in Caracas at firstname.lastname@example.org; Corina Pons in Caracas at email@example.com
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