CARACAS, Wednesday March 03, 2010 | Update
The data published by the Central Bank of Venezuela (BCV) at the end of the fourth quarter of 2009 make clear that the recession has deepened despite the recovery in oil prices.
In the fourth quarter of 2009, the price of the Venezuelan oil basket averaged USD 70.20, thus leaving far behind a decline due the global financial crisis. However, the Gross Domestic Product fell by 5.8 percent.
The statistics show that in the fourth quarter of 2009, private consumption declined 6.7 percent, investment plummeted 19.6 percent, government spending slightly increased by 2.1 percent, although it was the smallest increase in the past seven years. The only positive data was the surge of Venezuelan oil exports (56.2 percent), due to the rebound in oil prices.
As a result, the Venezuelan economy recorded its deepest decline in the fourth quarter of 2009 since 1994, excluding the period 2002-2003, when the lockout and the political upheaval hit Venezuelan production seriously.
The private sector plunged 7 percent to accumulate seven quarters of decline or growth around zero, while the public sector fell 0.3 percent.
If there is no output growth, sales fall, private companies do not need to hire new staff and there are no profits to increase salaries.
Further, Venezuela has the highest inflation rate in Latin America. As a result, purchasing power is declining every month.
The Central Bank admits that the decline in private consumption has a significant influence in the "fall in real income," which leads to a decline of the purchasing power of salaries.
According to economic forecasts made by 15 private firms such as Barclays, JP Morgan and Citigroup, Venezuela could reach a 0.5 percent growth this year, although the Venezuelan oil basket is around USD 69.82 thanks to increasing oil demand from China and other emerging economies.
Translated by Gerardo Cárdenas