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Second contraction year for Venezuela; 2% expansion forecasted in 2011

Thursday, January 6th 2011 - 21:08 UTC
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Central Bank President Nelson Merentes Central Bank President Nelson Merentes

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

Categories: Economy, Latin America.

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  • arquero

    mmm ... better than ruined California ....

    Jan 07th, 2011 - 11:21 am 0
  • fredbdc

    Please explain how? Even with years of stagnation CA still has an economy 3X larger than Argentina.

    Caracas now ranks as the world's No. 1 murder capital, according to Foreign Policy magazine. It's an assessment that will surprise few credible Venezuela watchers. During President Hugo Chávez tumultuous ten-year rule, Venezuela's quality-of-life indices have been in an ongoing tailspin -- thanks to epic levels of corruption and mismanagement; not to mention El Presidente's increasing concentration of power in his own hands.

    Jan 07th, 2011 - 04:32 pm 0
  • arquero

    fredbdc ###
    in California about 39 % of 18--30 years olds are unemployed...
    would you think to run China to get work !!??

    Jan 07th, 2011 - 07:49 pm 0
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