Andean Group - December 2012 (ISSN 1741-4466)

Venezuela has entered a phase of stable and sustainable growth”, boasted Finance Minister Jorge Giordani upon presentation the latest GDP results. Giordani noted that following third quarter GDP growth of 5.2% year-on-year, the government had already beaten its 5.0% growth target for the year. He also emphasised falling inflation, which has come down steadily this year. Many private analysts, however, argue that the current growth, which rests on a major increase in public spending this election year (and a surge in imports to meet domestic demand), is both ephemeral and unsustainable and may collapse in 2013. There is also mounting speculation that the government will have to devalue again in support of the budget position.

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