Coro, May 18th 2011 (Venezuelanalysis.com) – The Venezuelan economy has continued to recover from recession, with GDP growing by 4.5% in the first quarter of 2011, according to statistics released by the Central Bank of Venezuela (BCV) on Tuesday.
During an official press conference, BCV President Nelson Merentes attributed the positive growth to investment in the public sector, which grew by 3.3%, and to investment in the private sector, which grew by 4.6%.
The bank’s vice-president, Eudomar Tovar, stated that socialist policies were at the backbone of the rejuvenation in the economy.
“This socialist model goes against other models of production that try to maximise profitability from an economic point of view as opposed to a social one, which is what we see in a lot of Latin American countries that concentrate their efforts within the capitalist model,” he said yesterday during the television programme Contragolpe.
Recession and Pessimistic Forecasts
Like most economies during the global financial crisis, Venezuela went into recession in the first quarter of 2009 following a six-year period of sustained economic growth, during which poverty dropped by 47% and extreme poverty dropped by 70%.
The Chávez administration reacted to the recession by maintaining its social programmes and social spending and through the controversial devaluation of the Bolivar – ostensibly aimed at increasing government revenue for social programmes through oil rents and stimulating national production in order to diversify the economy.
Although critics claimed that the two-tiered exchange rate, with a higher rate of exchange against the dollar for non-essential goods, would significantly increase the country’s already high rate of inflation, recent economic indicators suggest that the inflation rate is declining in Venezuela.
The Central Bank’s recent statistics contradict numerous international financial forecasts, which calculated low levels of growth in the Venezuelan economy for 2011; last year institutions such as the International Monetary Fund (IMF) predicted 1.4% annual growth for the next five years.
The Central Bank’s statistics showed that the manufacturing industry grew by 7.6% while the construction sector contracted by 7.7% and the oil sector contracted by 1.8%. The government recently launched a new housing mission and increased investments in the oil industry.
“With the boost to the housing programme, we will see positive trends in the construction sector within the next few months, as well as the extensive plans for investment in the oil industry, which will have a bearing on performance,” said Minister for Planning and Finance, Jorge Giordani.
Other sectors that showed positive economic growth included retail (10.4%), transport and storage services (7.8%), communications (8%), government services (7.6%), finance (5.6%), and electricity and water utilities (3.1%).
Yesterday, President Chávez acknowledged the positive economic results and encouraged Venezuelans to “push on”, stating on his twitter account, chavezcandanga:“Well, steady growth once again started within our economy! Let’s push on everyone! Workers in the vanguard! We shall overcome!”