Merida, 28th November 2013 (Venezuelanalysis.com) – Venezuelan President Nicolas Maduro has defended his country’s economic performance after the central bank put third quarter GDP growth at a lower than expected 1.1%.
A boost in construction of public housing and state imports of food products and raw materials buoyed the 12th consecutive quarter of economic growth, according to the Central Bank of Venezuela’s (BCV) third quarter report.
The country saw growth of 0.7% in the oil sector, and 1.7% in the non-oil economy. Financial sector growth accounted for 19.5% of the latter. While the food sector enjoyed its fourth consecutive quarter of growth, public manufacturing suffered negative growth of 13.5%; the BCV attributed this to ongoing labour disputes.
Despite a 5.8% increase in building related to the housing mission, the construction sector contracted by 3.2%. The BCV points to a decrease in public demand for non-residential construction to explain the overall contraction of the sector.
“Overall, construction activity continues to be negatively impacted by failures in the distribution of basic inputs (cement and steel) and by labour problems,” the report states.
The BCV did report good news in the communications sector, which “increased significantly”. The sector’s 6.8% growth was largely due to renewed state investment in infrastructure, along with growing public demand.
“General” government services also grew by 2.7%, with the most growth recorded in services related to defence, health and education.
The Q3 results bring this year’s total GDP growth to 1.4%. The economy grew by 2.6% in the second quarter, and 0.6% in the first. The finance ministry had expected GDP growth of 6% in its 2013 budget, published late last year.
Despite the lower than expected growth figures, on Wednesday Maduro rejected claims from some private media outlets that the economy is in crisis, pointing to a reduction in unemployment.
“You tell me a capitalist country in the world or Europe where there is a decline in unemployment in 2013,” Maduro said, stating Venezuela is facing a “fictitious crisis”.
Released this week, the latest figures from the National Institute of Statistics put unemployment at 7.6%; down from 7.8% in September.
“If we had an actual crisis- the unfortunate product of a neoliberal economy, the first thing that would be affected is job creation. [Unemployment] would shoot as in the 90s, up to 25%,” Maduro stated.
According to another report released by the BCV this week, the government’s surplus is also up 82.5% compared to Q3 2012, at US$4.1 billion. The BCV also posted a trade surplus of just over US$10 billion for the quarter, and just under US$2.7 billion in repaid government debt.
However, Venezuela’s dependence on foreign capital nonetheless increased, with the BCV posting an increase in the capital and financial account deficit from US$4.4 billion to now US$4.6 billion.
Inflation also rose again in October, with the monthly rate hitting 5.1%, up from 4.4% in September. The bank pointed to “seasonal factors”, including increases in agricultural products and public transport ahead of Christmas. The bank noted that education and electricity prices also rose.
As of October, the 12-month inflation rate sat at 54.3%; the highest rate in at least five years. The scarcity index also rose marginally from 21.2% to 22.4%, as shortages of products such as milk and corn flour persist in some parts of the country.
Earlier this month, Maduro stated that his government’s ongoing crackdown on price gouging should lower inflation in November.
“All this has to have an impact on inflation in November and December,” he stated, referring to the consumer protection agency Indepabis forcing businesses to markdown the retail prices of goods ranging from electronics to shoes found to be overpriced.
“In November, according to the studies we are doing, inflation should be at a minus 5% minimum,” Maduro stated.