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

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.