fantasies and very few truths
The Central Bank of Venezuela has announced with a tremendous fanfare that the economy recovered in the first quarter of 2011, posting growth of 4.5% compared to the contraction of -4.8% for the same quarter in 2010. The Central Bank also reported that the non-oil sector grew by 5.2%, whereas the oil sector posted a drop of -1.5%.
Having analyzed the figures, we have no choice but to rain on the Central Bank's parade and warn that the figures contain a high proportion of fantasies and very few truths.
One of the truths told by Central Banks figures for the economy is that they admit that there was a contraction in oil GDP. This comes as no surprise, as oil GDP has been posting a downward trend since the first quarter of 2003, if not earlier, owing to the bad management of PDVSA and the lack of investment in the oil sector.
There was no surprise either in the fact that non-oil GDP posted an upturn in the first three months of 2011 compared to the paralyzed economy of the first quarter of 2010. It is worth recalling here that it was during that period that the electricity crisis broke, forcing the basic companies in Guayana to shut down operations in order to save electricity and avoid more severe electricity rationing in the central region. Now Guri has sufficient water, so it comes as no surprise that electricity GDP rose by 3.1% compared to the contraction of -1.4% in the first quarter of 2010. Apart from that, the first quarter of 2011 had 5% more working days than the first quarter of 2010 for the simple reason that Easter Week fell in April this year.
Among the less than credible figures is the 7.6% increase in manufacturing GDP. While the companies in Guayana are slowly getting back into production, the majority of the private business sector reports that it has been impossible for them to increase production thanks to government controls.
Another of the figures that stretches credibility to the limit is the growth of 10.4% for commerce sector GDP at a time when merchants are reporting that sales have dropped and, according to the Central Bank's own figures, the average wage this year is 7.8% below what it was in 2010 in real terms.
In short, while it would seem that the economy did recover in the first quarter, that recovery was substantially less than reported by the Central Bank.
Some analysts think that the Central Bank is not altering the figures deliberately and that the distortion comes from the manipulated data reported by the different government agencies and state-owned enterprises. Others, such as Orlando Ochoa, put the blame at the door of the president of the Central Bank.
Regardless of who manipulates the results, the point is that it is becoming impossible for the government to continue hiding the obvious: the rigors of the economy that Venezuelans are forced to suffer every day.
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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 Veneconomy , on May 24, 2011. Petroleumworld reprint this article in the interest of our readers.
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Petroleumworld News 05/25/2011
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