Morgan Stanley: Venezuela will generate 1.3% econ growth this year; no growth prediction wrong

[Peace Patriot]

"Morgan Stanley revised its forecast for the Venezuelan economy’s contraction this year to 1.9 percent from an earlier prediction of a 5 percent decline. South America’s third-biggest economy will expand 1.3 percent in 2010, according to Morgan Stanley, compared with a previous forecast for no growth." --Bloomberg

http://www.bloomberg.com/apps/news?pid=20601086&sid=aarBTRb_NPCU

Bear in mind that the Chavez government produced a sizzling economy over the previous five years (2003-2008)--a nearly 10% growth rate, most of it in the private sector (not including oil). The recent prediction of a 1.3 percent growth rate for Venezuela comes amidst a worldwide deep recession--some say Great Depression (I would)--caused by massive looting and ponzi schemes by the rich of the First World, with the banksters deregulated by the Bushwhacks and other corpo/fascists, and the Bushwhack government throwing trillions of dollars away in tax cuts for the rich and unjust war. Prediction of any growth at all is a remarkable achievement in these circumstances, and it is due to the Chavez government's tight regulation of the finance/banking industries, conservative management of the public's money and strategic buyouts and contract negotiations to yield the Venezuelan people the best returns possible on their resources and to maintain stability in critical industries, and thus creating a positive atmosphere for investment and business start-ups. From a prediction of no growth to a prediction of 1.3% growth, after a long period of spectacular growth, is very good news.

Also the Chavez government is taking measures to control Venezuela's high rate of inflation. For instance, "Venezuela won’t devalue its bolivar exchange rate, which has been fixed since 2005, this year or in 2010, as oil prices rise, Morgan Stanley said in a report today." Two of the analysts cited said that, "avoiding a jump in the exchange rate will help the government rein in inflation."

Morgan Stanley's view of Venezuela is not all good. For instance, they say that, "Consumer prices surged 28.9 percent in September from the same month a year earlier, the highest rate among 78 economies tracked by Bloomberg." (They don't mention whether Venezuelans' wages/incomes have risen as well--I believe they have--but will have to check on it.) Also, "Venezuela’s gross domestic product shrank 2.4 percent in the second quarter," and its "fiscal deficit will widen to 6.5 percent of GDP this year, up from a previous forecast for a 2.9 percent deficit." (It has previously been operating almost in the black--another remarkable accomplishment of conservative management of the public's money; the current debt is likely the result of how the government structured use of its $43 billion in international cash reserves, which it had saved for just such a "rainy day" as Bush Jr. inflicted on us all with his Financial 9/11 last September).

The Chavez haters here at DU are forever posting bad news about Venezuela. If the Chavez gov't generates spectacular economic growth over five years--even in the midst of every Bushwhack and rightwing plot imaginable to destabilize the country--they start harping on the crime rate or inflation, picking up and posting whatever a savagely Chavez-hating corpo/fascist press provides. And then there's always the fallback "Chavez is a dictator" ('just you wait, any day now, here it comes!') The Chavez government's numerous positive accomplishments are never mentioned.

Things are looking up in all three of the main Bolivarian countries--Venezuela, Bolivia and Ecuador--because these leftist governments are looking out for the interests of the people. I wish that our president had the power to do so here.

[Braulio]

1. Venezuelan Economy Metrics

The Chavez government didn't produce 10 % economic growth over the last 5 years. Your statistics are wrong.

Furthermore, government policy has very little with economic growth - they have a good economy because oil prices have more than tripled, and other commodities they export (such as steel) have also gone up as a result of the truly zizzling Chinese and Indian economies.

The government is following a fairly irrational policy, stoking the economy full blast, and causing very high inflation - which happens to hurt workers, the poor, and retired folk most of all. Right now they're going into debt by issuing huge tranches of US-dollar-denominated bonds. These will have to be paid, or they will go into default, in which case they won't be able to borrow anymore.

So the call is very simple, they may huff and puff real hard in the near term, acquiring debt, with the second highest inflation in the world (Zimbabwe takes first place). But medium term, unless oil prices go above $85 per barrel for a long period of time, they're going to be in trouble - or they're going to have to ask for help from foreign investors.

[ChangoLoa]

2. this info has already been posted

which shows that you don't even read the people you judge.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=405x24762

and thanks for economical marmalade! you reminded me of sarah palin with freddie and fannie there.

[spanza]

9. Mondongo con sancocho e' ñame

Mas enredado que gallina comiendo chicle

[Peace Patriot]

3. See what I mean? nt

[EFerrari]

4. I think they're cute.

:)

Thanks for posting, Peace Patriot. I'm burning down the kitchen right now but will be back later to read. :hi:

[Peace Patriot]

6. Yikes! Did your dinner survive--and your kitchen? nt

[EFerrari]

7. Yes, thanks! The kitchen is on the other side of the house

from my studio -- maybe I should wire up a smoke detector. :)

You know something I've never understood is the exchange rate -- specifically how Ven has the whole thing structured. So when bloomberg starts talking about it, my eyes glaze over.

But I do remember the no growth prediction. Good to hear things are better than was thought. Too bad we can't get that kind of news. With the credit card companies shutting people off with no notice, I get the idea they know something we don't. :(

[ChangoLoa]

5. run for vice president...

"Prediction of any growth at all is a remarkable achievement in these circumstances, and it is due to the Chavez government's tight regulation of the finance/banking industries, conservative management of the public's money and strategic buyouts and contract negotiations to yield the Venezuelan people the best returns possible on their resources and to maintain stability in critical industries, and thus creating a positive atmosphere for investment and business start-ups"

believe me, it's pretty close to Palin.

[Braulio]

10. i wonder, what's a critical industry in Venezuela?

I would like to see a ranking of the top 5 contributors to national income.

[spanza]

8. Confused?

Why this fascination with "operating in black"?
Is an expansive budgetary policy bad?

"nearly 10% growth rate, most of it in the private sector (not including oil)"
Are you implying that this is the proof showing that the growth was not only because of oil shock? Why should the Venezuelan oil sector grow during a shock? I think you don't know what growth means.