UPDATE 3-Venezuela GDP grows 8.7 pct Q3, but problems linger

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CARACAS, Nov 15 (Reuters) - Venezuela's economy grew by 8.7 percent in the third quarter on soaring oil prices, though a 4.4 percent slump in oil sector GDP and persistent inflation indicate continuing problems for the OPEC nation's economy.

Venezuela's GDP soared 10.3 percent in 2006, aided by record high oil prices and heavy spending by leftist President Hugo Chavez. But economists say Venezuela's economy is showing signs of declining productivity and weakness in the vital oil industry.

The Central Bank said the non-oil sector grew 9.7 percent -- partly offset by the decline in oil GDP -- driven mostly by the commerce and banking sectors, which have benefited from a boom in consumer spending.

Imports jumped a whopping 36 percent, compared with an 11 percent increase in exports, pushing the current account surplus down to $6.88 billion from $7.50 billion the previous year.

Venezuela's growth has been largely driven by consumption and "profligate and unabated" government spending, said Goldman Sachs analyst Alberto Ramos in a research note.

"Strikingly loose fiscal and monetary policies are contributing to leverage the non-oil economy up, although through mechanisms that are inherently unsustainable," Ramos said.

Burgeoning monetary liquidity has pushed inflation to the highest on the continent at an annualized rate of 17.2 percent to October.

The nation's bolivar currency, fixed at 2,150 per dollar by currency controls, has tumbled in parallel market trading to around 6,000 per dollar, compared with around 2,500 at the start of the year.