MercoPress. South Atlantic News Agency

Venezuelan economy expanded 17,3% last year.

Rocketed by strong oil prices and political stability Venezuela's economy surged 17,3 % in 2004 following two years of significant contraction, and according to a release from the Venezuelan Central Bank this was the largest increase “since indexes began to be recorded”.

During 2004 the Venezuelan economy was characterized by a significant recovery particularly the balance of payments and foreign reserves, plus increased industrial activity and a construction boom.

"The favourable performance of the economy in 2004 was evident both in petroleum-related activities, which grew 8.7%, as in non-petroleum activities, which rose 17.8%" points out the Central Bank.

The political instability of 2002 and 2003 included a short-lived coup against President Hugo Chavez and a national strike that lasted 63 days - seriously curtailing oil production - said BCV.

Economic output plunged during the first three months of 2003 because of the strike, which virtually shut down the oil industry.

The strike by managers, workers and tanker captains from the government owned oil giant PDVSA caused production to plummet from close to 3 million barrels per day (bpd) in November 2002 to some 150,000 bpd at the height of the strike.

The two-month strike cost the Venezuelan economy more than 10 billion US dollars, according to the Finance Ministry, while PDVSA lost some 4 billion US dollars.

In 2002 and 2003 the Venezuelan economy contracted 8,9% and 9,3%. Venezuela is the fifth-largest exporter of oil in the world and the US fourth-largest supplier.

"The growth experienced in 2004 will be sustained in 2005 because of among other factors, the strength of the international oil market, a climate of social and political stability, greater promptness in public-sector payments and a confident outlook from consumers and investors", added the BCV.

Last December BCV president Domingo Maza anticipated Venezuela's economy would expand between 7 and 8% in 2005.