Venezuela’s Economic Growth Doubles 2011 Forecast

Minister of the Economy, Jorge Giordani

Venezuela’s economy this year is set to grow at double the rate of the Venezuelan Central Bank’s forecast of a 2% expansion in Gross Domestic Product in 2011, with the BCV yesterday reporting third quarter GDP growth of 4.2% “Venezuela has entered a new period of growth. There’s a rate of approximately 4% in the first three quarters of 2011, which doubles the GDP estimate for this year,” Venezuelan Minister of Planning and Finance Jorge Giordani stated. The minister further emphasized that the aim of 5% GDP growth contained within the projected 2012 Venezuelan national budget was both “real” and “feasible”, with the Venezuelan economy likely to finish 2011 with over 4% GDP expansion. Construction was the most important economic sector contributing to the third quarter figures, growing by 10%

The news shows the apparently good shape of Venezuela’s economy, one of the largest and fastest-growing in South America. This will surely mean a higher influence exerted by this country in the continent, and also a more secure position for its president, Higo Chávez, who has been accused of electoral fraud and whose authority has been challenged heavily throughout the year. It will also mean an increase in foreign direct investment in the country and probably a higher value for the national currency, the bolívar. However, the news also shows a disturbing piece of information, the fact that Venezuelan growth appears to be based on the construction sector, something that has proved to be very dangerous in a liberal economy. That could mean that, if Venezuela finally adopted free trade policies and stopped basing its economy on oil exports and the construction sector, the country’s economy might be absorbed by the recession cycle that is currently affecting many industrialized nations in the world.