Venezuela's public spending boosts economy in 2012 by 5.5%
Growth in the construction sector was reported at 16.8% and commerce at 9.2%
Venezuela's economic activity in 2012 hiked 5.5% of the gross domestic product (GDP) thanks to public expenditure in construction, commerce and governmental services, yet progress in manufacturing was rather slow.
During the presentation of the preliminary results of the country's economic performance, Finance Minister Jorge Giordani, central bank's chair Nelson Merentes, and the president of the National Statistics Institute (INE), Elías Eljuri, stressed that the economic outcome was above the one estimated in fiscal year budget 2012 (Five percent).
Pivotal in such results was public investment. The authorities informed that government consumption expenditure soared 6.2%, whereas gross fixed capital formation (GFCF) climbed to 15.8%, the highest figure since 2007.
The rise in public expenditure led to a leap in construction (16.8%), which is 4.8% above the level reported in 2011. The increase is mainly attributed to the Great Mission Housing Venezuela, which received funds for USD 22.7 billion in 2012.
In the meantime, government services (Education, health, defense, and welfare programs) rose 5.2%.
For its part, the BCV indicated that private final consumption spiked to 7.3% with higher salaries, employment benefits, inter alia.
Meanwhile, commerce activity swelled 9.2% amid a rise in consumption.
Analysts have estimated that the economy has been highly dependent from public expenditure. If income drops, it is very likely to impact growth.
Unlike manufacturing whose growth was rather slow, mining dropped 5.3%.
Translated by Jhean Cabrera__
A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.