May 31 (Bloomberg) -- Venezuela’s economy grew less than economists forecast in the first quarter as fewer government dollar sales to importers resulted in the worst currency shortages since 2008.
Gross domestic product expanded 0.7 percent from a year earlier, the slowest pace since the last three months of 2010, the central bank said in a statement published on its website. The median forecast of eight analysts in a Bloomberg survey was for growth of 1.1 percent. GDP had expanded 5.5 percent in the fourth quarter and 5.6 percent in 2012.
“We’re seeing a slowdown in the economy which I’m sure will enter recession in the second quarter,” said Francisco Rodriguez, an economist at Bank of America Corp., in a phone interview from New York. A reduction in dollar sales “was much stronger in March so that surely it it will show more in the second quarter,” he said.
The government has held only one dollar auction since devaluing the bolivar in February, limiting companies from accessing the foreign currency they need for imports. The scarcity index, which measures the amount of goods that are out of stock in the market, rose to 21.3 percent in April from 20 percent the month before.
The government cut the rate of fiscal spending by 3.1 percent in the 23 weeks after late President Hugo Chavez won the Oct. 7 elections, Bank of America Corp. said in a March 20 report. Chavez died from cancer on March 5.
Economy in Turmoil
“The Venezuelan economy has suffered turmoil, the president’s death has upset us all,” central bank President Edmee Betancourt said May 30.
Inflation has accelerated as shortages mount, reaching 29.4 percent last month from 18 percent in November last year. Prices rose 4.3 percent in April from March, the fastest growth since April 2010.
A devaluation of 32 percent in the bolivar in February has failed to revive the flow of dollars into the economy.
The government is taking action, Finance Minister Nelson Merentes said May 26, reducing by half the delivery time of dollars to 2,000 companies that import essential items. Moreover, the new Sicad complementary foreign exchange system will become more flexible by allowing more companies to participate, Merentes said on May 30, adding that he didn’t know the date for the next dollar auction.
Venezuela posted a current account surplus of $1.74 billion up from a gap of $598 million in the fourth quarter of 2013, while the capital account recorded a $3.39 billion deficit.
Total imports grew 1.5 percent to $13.9 billion in the first quarter after the government imported about 21 more than the same period a year earlier. The private sector imported 10.6 percent less.
Venezuelan oil exports fell 5.6 percent in volume, the report said. Venezuela reported $21.36 billion in oil exports in the first quarter, 13 percent less than the same period a year earlier.
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