Weekly Report - 28 October 2010 (WR-10-43)

VENEZUELA | Recovery on hold. The government calculates that the economy will contract by 2.6% in 2010, worse than the initial projection of a 0.5% decline, according to one of the documents accompanying the 2011 budget. This is despite the steady recovery of oil prices, up from an average of US$57 per barrel in 2009 to US$70 per barrel this year. The economy has been in recession since the second quarter of 2009. The document blamed the external economic slowdown as well as the severe electricity crisis, which led to forced rationing, slowing down the recovery of industry and business.
The 2011 budget is, at US$88.79bn, 28% larger than this year's budget. It is predicated on growth of 2% and inflation of between 23% and 25%. The longer term vision for growth is not a great deal more encouraging: 2.4% in 2012, the year in which President Hugo Chávez will be seeking re-election, and 2.8% in 2013.
The finance minister, Jorge Giordani, told the national assembly, somewhat counterintuitively, that the country was “on the threshold of a new cycle of growth […] the Venezuelan transition to socialism." The budget is based on an oil price of US$40 per barrel. This is deliberately low in order to permit significant off-budget spending from sources such as the national development Fund (Fonden).

End of preview - This article contains approximately 226 words.

Subscribers: Log in now to read the full article

Not a Subscriber?

Choose from one of the following options

• Subscribe
• Sign up for a one-time, 14-day trial