BCV (Central Bank) Chair: Venezuela's economy is to enter an expansion cycle

[ChangoLoa]

Venezuela's economy is about to enter an expansion cycle and recession will be left behind said Nelson Merentes, the president of the Central Bank of Venezuela (BCV).

In his view, some factors such as the unofficial dollar and "a financial mini-crisis that was well managed by the (financial) authorities" adversely affected the domestic economy earlier this year.

"Growth will be sustained and the economy is to enter a cycle of expansion and increased welfare ... I can assure you that Venezuela will grow 2 percent, according to the goals set in the budget and it will grow slightly higher in 2012," he said.

http://english.eluniversal.com/2010/11/17/en_eco_esp_bcv-chair:-venezuela_17A4741931.shtml

[ChangoLoa]

1. Recession continues in Venezuela; GDP tumbles 0.4 percent

Despite rising oil prices recovering by 35 percent in the last nine months, the Venezuelan economy has not emerged from recession, according to data released by the Central Bank of Venezuela (BCV).

Although the report issued by the Central Bank highlights that "the GDP has stopped falling," the Venezuelan GDP shrank 0.4 percent in the third quarter of the year and throughout the first nine months of 2010, it has slumped at 2.4 percent.

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José Guerra, a Venezuelan economist and former economic research manager at the Central Bank of Venezuela (BCV), listed a number of reasons: declining consumption, investment slowdown, reduced exports, slow supply of US dollars, exchange rate appreciation and barely effective public spending.

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Guerra said that there was a negative balance although oil prices are higher than a year ago. Between January and September 2009, the Venezuelan oil price averaged USD 52.48, whereas in the same period of 2010 it exceeded USD 70, a 35 percent increase.

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Complete article:
http://english.eluniversal.com/2010/11/17/en_eco_esp_recession-continues_17A4740811.shtml

[CJvR]

2. Simply switch the power back on!

That alone should restrain some of the recession driving effects of the past drought. IIRC Venezuela got lucky and the Guri reservoar was filled in a single season, with normal rains it would take two.

[social_critic]

3. Nationalizations don't help

The lack of stability and continuous nationalizations don't help the economy. Private capital is paralyzed, and the exchange rate continues to make imports more attractive than local production. Higher oil prices aren't going to solve the problem.