Venezuela’s economy contracted 1.9% 2010, marking a second year of recession according to a release from the Central Bank. The economy shrank 3.3% in 2009, but President Hugo Chavez's government said the country is now pulling out of recession and on course for 2% growth in 2011.
We foresee a positive tendency for 2011, the Central Bank said in its annual report on preliminary economic data for this year. The report said oil GDP shrank 2.2% in 2010 while the non-oil economy fell 1.8%.
Estimated annual inflation in December was 1.6%, bringing the annual consumer price rise for 2010 to 26.9%, up from 25.1% in 2009, said the bank.
Venezuela's inflation is among the highest in the world. Central Bank President Nelson Merentes told state TV that inflation for next year was forecast at between 23-25%.
In the bank's report, Merentes said electricity rationing -- caused by a shortage of rain earlier this year -- was a factor in the economy's performance in early 2010 before signs of recovery could be seen later in the year.
The economy's contraction in 2010 reflected a 2.8% decline in private consumption and a 1.7% fall in internal demand, the report said.
The worst-hit areas during the year include manufacturing, down 11.9%; construction, down 7.3%; and the financial sector down 6.9%. The best-performing sector was telecommunications, which grew 7.8%.
Critics say President Hugo Chavez is leading the economy to ruins because of his nationalizations policy, a bureaucratic system of currency controls and other policies intended to launch his Bolivarian-Socialist revolution in Venezuela.
The central bank report said Venezuela's exports fell 12.5% in 2010, while imports dropped 5.5%.
The 2010 current account surplus was estimated at 13.9 billion USD, or 7.3% of GDP, while the capital account deficit was forecast at 20.1 billion. That would compare with a current account surplus of 8.6 billion and a capital account deficit of 14 billion in 2009.
The economy of Venezuela is largely based on the petroleum sector, which accounts for roughly a third of the country´s GDP, around 80% of total exports, and more than half of the government operating revenues. Venezuela is the fifth largest member of OPEC and one of the main suppliers of crude to the US