|
World
Brazil
Mexico
Bolivia
Peru
Trinidad &
Tobago
Venezuela
Petroleumworld
Bookstore
Institutional
links
OPEC
Petroleumworld
Business Partners
IRAQ OIL  THE FORUM
Blogspots
recomended
caracas chronicles
Iran Watch.org
Venezuela Today
Le Blog des
Energies Nouvelles
|
|
Editorial / Commentary / Opinion
VenEconomy: Cracks in the armor plating
The Central Bank has published its figures for the fourth quarter and all of 2009. Basically, the report shows that the economy posted its biggest decline since 1994 (excluding 2002 and 2003, the years of the general-oil strike).
The surprise was not that the economy has declined, but how much.
GDP for the fourth quarter of 2009 contracted by 5.8%, giving a total drop of3.3% for the year versus the estimated 2.9% announced by the Central Bank at the end of 2009.
This difference of 0.4 of a point is due to the revision of oil GDP, which fell by 10.2% in the fourth quarter to give a total of -7.2% for the entire year, compared to a drop of 6.1% estimated by the Central Bank at the close of last year.
Apart from the substantial difference in oil GDP, the figures given in the Final Report were fairly close to those estimated at the end of 2009 by the Central Bank. For example, the Central Bank nearly got it right with the drop of 2% in GDP, as in December it announced a preliminary figure of 1.9% for the entire year.
However, the report does have some surprises, particularly when the figures are analyzed sector by sector.
One of the results that are surprising (to say the least) is that electricity and water GDP rose by 5.5% in the quarter and by 4.2% in the year. If industry was already in a state of collapse in 2009 and there were constant blackouts throughout the country, the question is, where did this increase come from?
Another surprise is the 11.2% in the mining sector. This is the sector that suffered the biggest drop in percentage terms in the year, something that is unexpected given that the mining sector is intimately linked to the construction sector, which ended up unchanged. Analysts attribute this drop to the considerable deterioration experienced by the state-owned Ferrominera and Bauxilum, and also by the paralysis of the expropriated cement companies.
The Central Bank gives a clearer explanation when it states that the heavy contraction in the metals (-45%) and nonmetal minerals (-26.8%) sector was due to “the nationalization process undertaken by the Executive with a view to promoting the new socio-productive model” (sic).
Equally surprising is the posting of 2.8% growth for the government services sector, when there was a reduction in real terms in Central Government spending of 17.6%.
But the worst part of these results is not the contraction of the economy as such. What is most significant are: 1) the 6.7% drop in private consumption, which reflects an impoverishment of the population; and 2) the sizeable 19.6% drop in fixed gross investment. A classical rule of economics says that “if you don’t invest today, you won’t produce tomorrow.” Unfortunately, the strong contraction in fixed gross investment posted in 2009 guarantees that the results of the economy in 2010 will be the worst in 16 years.
VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.
Editor's Note: This commentary was originally published by VeneEconomy on 03/03/2010. Petroleumworld reprint this article in the interest of our readers .
Petroleumworld reprint this article in the interest of our readers.All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld,
Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments,
share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us their views and
comments about this article, write to editor@petroleumworld.com
Petroleumworld News 03/04/2010
Copyright© 1999-2009 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source.Other stories you have to get authorization by its authors
Send this story to a friend Any question or suggestions,
please write to: editor@petroleumworld.com
Best Viewed with IE 5.01+Windows NT 4.0, '95, '98, ME,
XP, Vista, W7 +/ 800x600 pixels
|
| 
