(Adds finance minister comment)
CARACAS, Aug 20 (Reuters) - Venezuela's economy shrunk for
the first time in over five years in the second quarter, after
a government-driven consumer boom petered out and the global
recession finally bit South America's biggest oil exporter.
The OPEC nation's gross domestic product contracted 2.4
percent in the three month period, with most of the fall in the
oil sector, which was down 4.2 percent.
The downturn will aggravate the impact of Venezuela's
inflation which, at 13 percent so far this year, is one of the
highest in the world.
The contraction comes "after 22 consecutive quarters of
growth, and more than a year after the impact of the global
financial crisis negatively affected the economic performance
of most countries in the world," the bank said in a statement.
On the upside, Venezuela's current account showed a surplus
of $2.2 billion in the quarter, after two periods of deficit.
The capital account also showed a surplus, of $1.2 billion.
Finance Minister Ali Rodriguez said economic growth
was"perfectly recoverable," but did not say how quickly.
"We have had much harder falls and we have recovererd," he
said on state television.
High public spending by President Hugo Chavez during an oil
bonanza meant even the poor had some money to burn, spurring a
five year shopping spree defined by double digit growth. But
the boom ended abruptly in the April-June period.
Clearly expecting a contraction, the government said last
week it has prepared an economic stimulus that is waiting for
Chavez's approval and is expected to tackle a weakening local
currency and encourage investment. It will be the second
attempt to kick-start the economy this year.
Rodriguez hinted the measures could affect the already
tightly controlled banking sector, which he accused of
speculation.
Since 2007, Chavez has radicalized his program, fully
embracing socialism and nationalizing most of the nation's
industry including several huge oil projects owned by foreign
companies.
The economy grew 8.4 percent in 2007, but in a sign his
spend-and-nationalize model was running out of steam, it slowed
to 4.8 percent last year despite an average oil price of $87
per barrel and a peak of $147.
Venezuela finances were hard hit when oil prices plummeted
from a record of $147 per barrel a year ago to about $30 at the
start of 2009.
"(The data) confirms expectations that Venezuela is
sufferring from what's going on abroad, and that the government
is very concerned that the model is not sustainable in the long
term, but at the same time it is relatively modest," said Maya
Hernandez, an economist with HSBC.
Venezuela's fall has not so far been so hard as that of
countries such as Mexico, whose economy was 10.3 percent
smaller in the second quarter, after shrinking 8 percent in the
first quarter.
Chavez in February cut Venezuela's budget, reduced the
average oil price estimated in the budget, raised sales tax and
authorized more borrowing to avoid a fiscal deficit.
"What they need is a stronger fiscal stimulus. This is
especially true with inflation falling, in Venezuela and world
wide," said Mark Weisbrot, an economist with the
Washington-based Center for Economic and Policy Research.
In 2008 Venezuela's inflation reached 17 percent by July
and was 31 percent at the end of the year.
(Reporting by Caracas Newsroom; Writing by Frank Jack Daniel)
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