CARACAS, Venezuela — Venezuela’s gross domestic product grew 5.5 per cent in 2012 compared to the previous year, consolidating an economic recovery that began in 2010.

The growth was fuelled in part by government spending, especially on a programme to construct low-income housing. Construction grew 16.8 per cent.

Central Bank President Nelson Merentes announced the figures yesterday.

Private sector production grew 6.1 per cent and the public sector production rose 5.2 per cent. The all-important oil industry grew 1.4 per cent.

The manufacturing sector grew a modest 2.1 per cent. Industry leaders complain that currency exchange controls make it difficult to procure dollars that manufacturers need to import raw materials. They also say the overvalued Bolivar currency makes locally produced goods uncompetitive with imported ones.

Also mitigating the recovery is Venezuela’s 18 per cent inflation rate.

During his re-election campaign, President Hugo Chavez promised to deepen the “21st century socialism” that has meant an ever-greater state role in the economy. That message won him a surprising 11 percentage point win in what many had thought would be a tight race.

Still, he’s set to start a fourth presidential term in January under challenging economic circumstances. The government’s free-spending ways, bankrolling the generous social programmes that aided his re-election, may be seriously crimped.

Venezuela faces immediate economic time bombs beginning with a rapidly expanding public debt, Latin America’s highest inflation rates and a weakening currency.

Many economists believe that the country will have no choice but to devalue the currency, the bolivar, by about half early next year at the latest. That will make the money in people’s pockets suddenly worth a lot less and likely drive inflation while putting imported consumer goods out of reach for poorer Venezuelans.

Price controls and government subsidies for basic foodstuffs have eased inflationary pressures but a major devaluation would drive prices higher and could worsen scarcities, economists say.