El Universal reported that Venezuelan economy in the second quarter spiked to 2.5%, but growth is losing momentum as a result of the new economic scheme.

Think tank Ecoanalítica in a report on the behavior of the Gross Domestic Product in the first half of 2011 said that "The new economic model not only arrests development of the private sector, but also of the private sector. Growth is very slow as to spurring economy."

According to the firm, both the public and private sector are lagging behind their potential. It said that "Hence, low growth rates. Thus, what we used to call boom or surge when oil prices would rise, now, we just call it a break."

Based on the numbers supplied by the Central Bank of Venezuela, the firm stressed that "While economy keeps rising, growth is losing momentum. This means that the country has not fully recovered yet from the recession of the past two years. A 2.5% rate is very far from the rate actually needed to overcome recession accordingly. The GDP continues being significantly lower than the GDP recorded in the same term in 2008, when the variation amounted to 7.8%."

BCV data revealed that despite expenditure edged higher to 3.4% (the highest level for a second quarter since 1998), the effect of outlays on the public and private sectors were not as expected.

The firm specifies in the report, for instance, that oil operations grew 0.1% in the first quarter and non oil operations leapt 4%, in contrast with variations during FY 2008. Just three years ago, the oil basket averaged USD 102, similar to USD 98 recorded in the first half of 2011.

(Sourced from www.eluniversal.com)