Economy, Globe, Latin America

Venezuelan economy, indeed recovering

Analysis of the General Index of Monthly Economic Activity showed a better performance than what was forecast for January and February, according to the president of the Central Bank, Nelson Merentes.

Waldo Mendiluza

The Venezuelan economy could see twice as much growth as the two percent predicted for the 2011 budget, according to early indicators from the Central Bank. “We see favorable activity in public and private manufacturing, construction, trade and consumption, which points to higher growth for the gross domestic product that what was forecast, with the possibility of it being as twice as high,” Merentes said in a press conference.

Those figures also make it is also possible to project sustained economic growth in 2012, based on the investments announced by President Hugo Chávez in housing, the railroad, and agriculture, along with the traditional boost from the oil sector, stimulated by the price of 100 USD per barrel. For example, the sectors of housing construction and agricultural development alone will receive an injection of 44 billion bolivares (10 billion USD).

Other questions to consider are a greater availability of hard currency for importers, the recovery of the credit portfolio, and prospects for basic industry. In 2009 and part of last year, Venezuela was in a recession, as a result of the world financial crisis and the impact of the climate, a depression that was overcome in the October-December quarter with 0.6 percent growth in its GDP.

Leaving behind the stagnation was approached cautiously by the government, although without considering the shift as a probable return to the course of the country for 22 consecutive quarters of prosperity, after a Coup d’etat and the oil strike led by the opposition in 2002 and 2003, respectively. Now, nobody can dare to deny the new situation, because the early indicators come in addition to the 0.6 percent of late 2010, Merentes stated. Growth will represent better social well-being, Planning and Finance Minister Jorge Giordani said.

The Venezuelan government will maintain its policy of prioritizing health, education, employment and other sectors, the same policy that has signified social spending of 330 billion dollars over 11 years of revolution, an unprecedented amount, he said. Giordani also addressed the issue of inflation and the efforts of the administration to reduce it to less than one digit, something that was last reported here in the 1980s. In March, the Consumer Price Index reaffirmed its downward tendency, closing at 1.4 percent, lower than February and the same month in 2010.

The struggle against speculation and inefficiency, in addition to higher production, are actions that have been identified to reduce inflation. “That is the situation we are working with – economic growth, social investment and the fight against inflation,” Giordani said. PL

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