Mérida, May 21st 2009 (Venezuelanalysis.com) - Venezuela's GDP grew by 0.3% in the first quarter of this year, bringing the number of consecutive quarters of economic growth in Venezuela to 22, according to the Central Bank of Venezuela (BCV).
The growth occurred primarily in the non-oil sector of Venezuela's economy, which grew by 1.3% overall. The communications sector grew by 9.7%, community services by 4.6%, electricity and water by 3.7%, and transportation services by 1.1%.
Meanwhile, Venezuela's oil sector, which accounts for more than 90% of the country's exports, contracted by 4.8%, and overall exports decreased by 16.9%, according to the BCV.
Finance Minister Ali Rodriguez explained that the global economic downturn has cut the price of Venezuelan oil from an average of $87 per barrel last year to an average $42 per barrel so far this year, and prompted the Organization of Oil Exporting Countries (OPEC), of which Venezuela is a member, to enact two supply reductions.
The mining sector declined by 13.6%, the banking sector shrank by 2.9%, and the manufacturing sector shrank by 1.1%, according to the BCV.
In March, the government reduced its overall national budget by 6.7% to adjust to lower than expected oil prices. To keep its international currency reserves, the government has reduced its issuance of dollars at the official exchange rate by 50%, prioritizing productive and essential sectors such as food and housing.
As part of the budget revisions, Venezuela changed its projected total growth for this year from 6% to, according to Minister Rodriguez, one or two percent at most. The state's austerity measures include a 20% increase in the minimum wage, the maintenance of social programs, and the reduction of executive salaries and other unnecessary government spending.
To generate revenue, the government plans to nearly triple its domestic debt, and has raised the sales tax from 9 to 12%.
Venezuela's GDP declined in 2003 because of a debilitating, opposition-led oil sector shutdown meant to oust President Hugo Chávez. After that, Venezuela grew by 18.6% in 2004, 10.3% in 2005 and 2006, 8.4% in 2007, and 4.8% in 2008, according to the BCV.