Venezuela's economy expanded more than economists estimated in the fourth quarter, led by government and consumer spending.
The economy grew 8.5 percent from a year earlier, the central bank said today in a statement. That exceeded the 7.9 percent median forecast from nine analysts surveyed by Bloomberg. For all of 2007, gross domestic product rose 8.4 percent.
Venezuela, the biggest oil exporter in South America, will probably continue to grow at one of the fastest paces in the region in 2008, as high energy prices provide President Hugo Chavez the cash to expand social programs, said Gianfranco Bertozzi, an economist at Lehman Brothers Holdings Inc.
``The oil market is extremely buoyant, and there's still plenty of oxygen for the local economy,'' he said in a telephone interview from New York. ``There's plenty of room for the government to spend more.''
Venezuela is the fourth-biggest supplier of crude oil to the U.S. Oil futures traded in New York rose to a record $101.32 yesterday, and prices are up 64 percent from a year ago.
The central bank said output by the state-owned oil producer declined 2.2 percent in the fourth quarter, while private companies boosted output 4.8 percent. Oil-sector GDP has declined in 10 of the past 12 quarters, according to figures on the central bank's Web site.
Manufacturing grew 6.7 percent, retail sales added 14.7 percent and communications rose 18.9 percent, the bank said.
Venezuela's inflation rate, the highest in Latin America, rose in 2007 to 22.5 percent, as growth in demand outstripped supply.
Government spending has more than tripled in the past five years, as Chavez increased hiring at public companies, raised wages and developed new state-run healthcare, education and food distribution programs.
The resulting increase in the money supply, along with caps on consumer interest rates set by the central bank, have fueled a consumption boom.
The government has lifted price controls on certain foods, including long-life milk, in a bid to encourage increased production. That will probably cause inflation to accelerate again this year, Bertozzi said.
``Lifting controls on certain goods will help ease some of those shortages, but it will also fuel the inflationary bomb,'' he said. ``They have to walk a fine line.''
Lehman predicts consumer prices will rise between 30 percent and 40 percent in 2008.
A continued decline in oil output at state-owned Petroleos de Venezuela SA, along with government attempts to restrict growth in liquidity through measures including higher reserve requirements and savings deposit rates at banks, will probably cause economic growth to moderate this year, said Alejandro Puente, an analyst at Banco Provincial SA in Caracas.
He expects the economy to expand 5.7 percent in 2008.