Venezuela’s GDP Surprises on the Upside

Venezuela’s results are a big surprise as they show a dramatic improvement in the country’s economic conditions, which is difficult to digest given the current dynamics the country is undergoing.

Venezuela contracted 1.9% y/y in Q2 2010, after a 5.2% y/y contraction in Q1 2010 and surprising markets to the upside. In Q2 2010, Venezuela’s government consumption printed a positive 3.1% y/y, compared with 0.2% y/y in Q1 2010, and investment recovered from a dramatic -39.5% y/y in Q1 2010 to a positive 0.1% y/y in Q2, with fixed capital investment rebounding to -0.8% y/y from -23.8% y/y in Q1 and aided by an over 200% spike in inventories. Consumption remained in the negatives at -2.4% y/y. Exports summed to US$16 billion (US$15.2 billion in oil exports) and imports totaled US$9.9 billion. Oil sector GDP contracted by 2% y/y, while non-oil sector fell by 1.7% y/y.

Editor’s Note: This post is excerpted from a much longer analysis available exclusively to RGE Clients, LatAm Focus: Colombia Pushes Forward While Venezuela Surprises to the Upside

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