The year-end message of the interim president of the Central Bank of Venezuela, José Ferrer, unveils a sharp slowdown in the domestic economy even though the global financial crisis has not shocked the country. 

The interim figures issued by the central bank show than in 2008, Venezuela's GDP grew 4.8 percent versus 8.4 percent in 2007, while oil revenues soared 48.5 percent, from USD 62.55 billion to USD 92.92 billion.

While the oil sector production rose 3 percent compared to a 4.2 percent fall in 2007, the non-oil sector lost momentum and grew 5.3 percent vs. 9.5 percent in 2007.

The slowdown is apparent in key areas related to production and job creation. For instance, the growth in the manufacturing sector was 1.6 percent vs. 7.2 percent in 2007; construction 6.7 percent (2008) versus 13.3 percent (2007); trade 3.8 percent versus 16.9 percent; transport and storage 3.6 percent versus 13.5 percent, while the financial sector fell 4.5 percent versus an increase of 17 percent in 2007.

The only activity that maintained the growth rate registered in 2007 was telecommunications (with a 21.4 percent growth).

Investments, which in 2007 grew 25.4 percent, shrank 2.1 percent.

Thanks to the nationalization of electric power utilities and telecommunications, the non-oil public sector rose 15 percent in 2008, while the private sector grew 2.7 percent, compared with an 8 percent jump in 2007.

Lower consumption
The central bank did not explain the causes of the loss of momentum in the economy but made clear that consumption, which is a key variable, has been seriously undermined by high inflation and rising interest rates.   

Private consumption, which grew 18.7 percent in 2007, is still growing but at a 6.4 percent rate, despite the fact that unemployment fell to 7.6 percent and public spending kept pumping money.

"The loss of purchasing power of salaries and the cost of credit were factors that contributed to the slowdown in private consumption," said the Central Bank of Venezuela.

The report says that "in a context characterized by the acceleration of inflation, real wages (purchasing power of wages) showed an average yearly decrease of 3.4 percent. 

"Missing" wages
In fact, when the central bank analyzes the results by sector, it says that, in average, the wages of workers employed in the private sector of the economy bought 5.6 percent less than in 2007, while the wages of public employees increased their purchasing power by 1.3 percent.

Translated by Gerardo Cárdenas