Venezuela economy shrinks for first time in 5 years

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.

High public spending by President Hugo Chavez during an oil bonanza meant even the poor had some money to burn, spurring a long shopping spree defined by double-digit growth. But the boom ended abruptly in the April-June period.
Venezuela’s finances were hard hit when oil prices started a free fall late last year, while a string of nationalizations has dampened the private sector’s appetite for investment.

Growth had already slowed late last year and the economy expanded a slim 0.3 percent in the first quarter.

Finance Minister Ali Rodriguez warned that higher unemployment was likely on the horizon but said that with world oil prices gradually ticking up, economic growth was “perfectly recoverable.” He did not give a time frame.

Reuters