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Weekly Report - 19 November 2009 (WR-09-46)

VENEZUELA: Economic slump could have political repercussions

Under the informal rule of thumb, Venezuela has officially entered recession for the first time in five years after posting two quarters of negative growth. GDP contracted by 4.5% year-on-year in the third quarter, after falling by 2.4% in the second. The economy and finance minister, Alí Rodríguez, was compelled to revise his forecast of zero growth for 2009 to a contraction of between 1% and 2.2%. He refused to revise the BsF159bn (US$74.1bn) budget for 2010, sent to the national assembly for approval last month, some 46% of which is destined for social welfare spending. The poor results inevitably raised questions about the sustainability of this spending.

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