Venezuela economy grows 4.5 percent in 1st quarter

May 17, 2011 - 7:43 PM

CARACAS, Venezuela (AP) — Venezuela's economy expanded 4.5 percent for the first quarter, confirming a growth trend after nearly two years of recession, officials said Tuesday.

Growth in both the public and private sectors contributed to the recovery, even as the key oil industry contracted 1.8 percent, Central Bank president Nelson Merentes said at a news conference.

The rapid expansion came after the last quarter of 2010 showed Venezuela had barely emerged from recession with 0.6 percent growth, in a year that saw an overall decline of 1.4 percent in gross domestic product.

The jump between the first quarter of 2011 over that of 2010 was a sharp change from the 4.8 percent decline for the first quarter last year.

The public sector grew 3.3 percent, while the private sector grew 4.6 percent, Merentes said.

Merentes attributed the decline in the oil sector to the number of drills the state oil company Petroleos de Venezuela SA had in operation during the period. He expressed confidence that the sector will grow in the coming months.

Sectors that boosted growth included manufacturing (7.6 percent), retail (10.4 percent), communications (8 percent) and transportation and warehousing services (7.8 percent).

Planning and Finance Minister Jorge Giordani said the quarter's results show that "we're going toward growth that is going to be sustained."

The Central Bank said, however, that the private construction sector, which has traditionally helped drive growth, declined 17.8 percent due to "less availability of basic supplies."

Venezuelan President Hugo Chavez's government has also expropriated residential buildings and has seized the assets of various construction companies in the past year, accusing them of fraud.

While the manufacturing sector grew as a whole, auto production declined 3.1 percent for the quarter, and other equipment manufacturing contracted 10.9 percent.

Economist Jose Guerra of Venezuela's Central University said the first quarter growth represents a "statistical rebound" because it's in comparison to the a particularly negative first quarter in 2010.

The government has predicted 2 percent growth this year.