Economy
After five years of expansion, Venezuela's economy plunged into recession at the end of 2009 with a decline of 2.9 percent, said Nelson Merentes, the president of the Central Bank of Venezuela (BCV) in his Year End message.

The official figures show the failings of the mechanisms that drive growth and wealth.

According to the central bank, in 2009 consumption declined by 1.8 percent, investment sank by 7.6 percent, and exports plunged by 35.9 percent, while public spending soared 2.1 percent —yet the lowest increase in the last four years.

Further, some key sectors were hit. Manufacture dropped 7.2 percent, trade was 8.2 percent down, and transport declined by 8.5 percent.

Construction remained afloat, with an increase of 3.1 percent. The communications sector climbed 10.1 percent, while electric power generation and water increased by 4.6 percent.

Overall, the non-oil economic sector fell 1.9 percent, while oil output tumbled 6.1 percent.

According to the BCV, Venezuelan oil production mirrors "the cuts implemented by the Organization of the Petroleum Exporting Countries, in a context of weak energy demand, as a result of the global economic crisis."

The non-oil sector is suffering the impact of weakening consumption and investment, "the uncertainty regarding the recovery of the global economy and the contraction of imports during the year, particularly in the third and fourth quarters."

"The reduced supply of foreign exchange by the Foreign Exchange Administration Commission (Cadivi) had an impact on shrinking imports. Cadivi implemented more stringent policies to manage foreign exchange amidst the decline of revenues from exports," noted the central bank.

The report indicates that the preliminary result of the balance of payments is USD -11.02 billion (5.5 percent of GDP), due to an unfavorable international environment.

The current account balance was USD 12.41 billion (6.2 percent of GDP). Total exports fell due to lower volumes of oil shipments (-3.6 percent), while oil prices in international markets decreased by 32.7 percent.

Thus, exports ended the year at USD 60.93 billion, compared to USD 95.13 billion in the previous year. This represents a 35.9 percent decline. Oil companies' revenues stood at USD 57.61 billion this year, from USD 89.12 billion in 2008, down 35.3 percent.

Meanwhile, non-oil exports stood at USD 3.32 billion, a decrease of 44.7 percent compared to 2008, in the public and private sectors, especially companies producing base metals, chemicals and chemical products and rubber products.

Imports also fell, but less so. They decreased by 22 percent, from USD 49.48 billion in 2008 to USD 38.5 billion in 2009.

Meanwhile, the BCV noted that the balance in the capital and financial account was USD -18.90 billion, compared to USD -24.82 billion at the end of 2008.

The real sector of the economy was also hit by recession. Demand fell 1.8 percent as a result of lower private sector consumption. Similarly, unemployment ended at 8 percent, one percentage point above the target set for 2009.

Víctor Salmerón / Suhelis Tejero Puntes
EL UNIVERSAL