CARACAS, Friday January 21, 2011 | Update
Bad news for Venezuelan economy

Economic slowdown, which has hit Venezuela for two consecutive years, had direct effects on Venezuelan households. The impact hit hardest the lowest social strata of the population, not only because the number of families in this social level soared, but also because they are consuming less staple products

The executive office will use a loan from China to build houses (File photo)
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Friday January 21, 2011  04:02 PM

January 17

Venezuelan government fails to meet goal of 120,000 housing units
During his Annual Address to the National Assembly, President Hugo Chávez referred to the housing deficit in Venezuela, but rather than announcing completion of housing units, he disclosed plans to build houses in the future.

Chávez disclosed an "ambitious" plan to build 150,000 housing units in 2011 and 200.000 housing units in 2012.

The government made similar announcements in previous fiscal years, but has always failed to meet the goal. In 2005, Chávez said that his government would build 120,000 housing units throughout the period and in 2006. However, according to the Reports and Accounts of the Ministry of Housing, the government failed the target during those two years.

In fact, the Reports and Accounts of the Ministry of Housing show that the government built 21,400 housing units in 2005, which is only 18 percent of the target (120,000 housing units.) Meanwhile, 40,340 housing units were built in 2006 (88 percent more than in the previous period), but only 34 percent of the initial goal of building 120,000 housing units.

The Venezuelan head of state and his ministers said in those two years that the construction of housing units should be speeded up and invited the private sector, cooperatives and communities to participate in the effort.

In 2011, the government will use part of a USD 20 billion loan signed with China for housing construction.

Trade sector calls for actions to boost Venezuela's economy
Fernando Morgado, the president of the president Venezuelan Council of Trade and Services (Consecomercio), said that the government must move from words to action if it wants to lead an economic recovery.

"We insist that if (the authorities) want to rectify they should start by reversing all the decisions that have hurt the economy," said the president of Consecomercio during a meeting of the board of directors of the Venezuelan Federation of Trade and Industry Chambers (Fedecámaras).

Morgado added that the "unfair takeovers" of companies and lands must be stopped.

January 19

Purchasing power and consumer credit plunge in Venezuela

Based on economic figures at the end of 2010, consumption in Venezuela has declined, thus curbing credit card financing and car loans.

In 2010, credit card loans amounted to VEB 26.66 billion (USD 6.20 billion), according to data provided by the Venezuelan Superintendence of Banks. After inflation, this represents a 2 percent fall compared to 2009.

Meanwhile, car loans decline is 22 percent, after inflation.

Even though poor car supply, reduced US dollar quota to make purchases over the Internet, and restricted use of the annual US dollar quota for travels abroad have had a negative influence, the main factor is the declining purchasing power of wages.

Venezuelan households have been seriously hit by the highest inflation in Latin America, as in the last 12 months prices increased dramatically by 27 percent. This surge has not been offset by modest wage increases in the private and public sectors.

In real terms, after inflation, tumbling purchasing power at the end of the third quarter of 2010 amounts to 1.8 percent for workers in the private sector and 15.3 percent for public workers.

Venezuelan govn't plans to adopt measures in the agri-food sector
Tumbling domestic production could lead Venezuela's Executive Office to take steps to address both the consequences of heavy rains in the agricultural regions of the country and the effects of devaluation on the prices of food items, commodities and inputs.

Sources said that government authorities have been discussing the possibility of implementing subsidies for agricultural products and food items or authorizing price adjustments for certain consumer goods.

Private sector's leaders expect government measures to be announced in the next few hours by President Hugo Chávez.

The government said initially that the devaluation of the bolivar should not result in price increases. Authorities have insisted that the Institute for the Defense of People in the Access to Goods and Services (Indepabis) must play an important role against speculators.

Spokespersons for the private sector claimed that prices cannot be prevented from soaring. The Venezuelan Chamber of Food Processing Industries (Cavidea) said that devaluation "involves a 65.38 percent increase in imports of raw materials and inputs that are vital for processing and production of food items in Venezuela."

January 20

Venezuela among the countries with less economic freedom
Venezuelan economy is among the most "restricted" in the world, according to the 2011 Index of Economic Freedom from the conservative think-tank Heritage Foundation and The Wall Street Journal.

The study reports that Venezuela's economic freedom score was 37.6 and ranked 175 out of 179 countries for which data are available. Only Eritrea, Cuba, Zimbabwe and North Korea have more restricted economies, according to the index.

The study found that compared with last year's results, Venezuela fell one spot in the ranking.

The 2011 Index of Economic Freedom reports on the development of economic policies implemented as of the second half of 2009. The Index of Economic Freedom ranks countries according to their economic freedom based on 10 economic categories (business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labor freedom) that evaluate economic openness, competitiveness and the rule of law.

The principles of economic freedom that are highlighted in the index are individual empowerment, non-discrimination and open competition.

The highest-ranking countries in the world with regard to economic freedoms are Hong Kong and Singapore, Australia, New Zealand, Switzerland and Canada.

The South and Central America/Caribbean region gained the second highest rank in economic freedom in average.

Chile is among the world's top 20 freest economies, (it ranked 11), while Colombia and Costa Rica are among the countries that showed more progress on the issue of economic freedoms.

Based on the report, not only are higher levels of economic freedom associated with higher per capita incomes, but also greater economic freedom is also strongly correlated to overall well-being, which takes into account factors such as health, education, security, and personal freedom.

Additional credits increase by 66 percent in 2010
Higher labor commitments and budget shortfalls recorded by official entities in 2010 forced the government to increase additional credits.

Extra-budgetary expenditures approved by Venezuela's National Assembly last year amounted to VEB 79.5 billion (USD 18.48 billion), while in 2009 the Venezuelan Parliament authorized VEB 38 billion (USD 8.84 billion). This shows a 66 percent increase in real terms in the last 12 months, according to estimates made by research firm Ecoanalítica.

Extra-budgetary expenditure in 2010 is the highest recorded in the last 10 years.

Prior to the USD 18.48 billion approved last year by the National Assembly, the highest amount in additional credits was granted in 2008 (USD 12.79 billion).

After taking into account additional credits, budgetary and extra-budgetary expenditures in 2010 amounted to VEB 238.5 billion (USD 55.46 billion), while the initial budget approved amounted to USD 37.07 billion.

According to the additional credit authorized in 2010, 52 percent of the funds were allocated to labor commitments.

The pro-government deputies approved additional credits amounting to USD 9.77 billion to pay increases in minimum wage and social security pensions and to raise the salaries of military and medical staff.

Venezuela among countries with increased unemployment in the region
Venezuela is among the only five Latin American and Caribbean countries where job creation deteriorated in 2010

According to the 2010 Labor Outlook prepared by the International Labor Organization (ILO), jobless rate rose in Honduras, Venezuela, Barbados, Jamaica and Trinidad and Tobago.

As regards Venezuela, unemployment soared from 8.1 percent in the first 10 months of 2009 to 8.8 percent in the same period in 2010.

Miguel del Cid, the author of the report, said that the countries that recorded an increase in unemployment have not completely overcome the global economic slowdown. He added that Venezuela, which depends largely on oil production, has been hit by low oil prices in world markets.

January 21

Vulnerable households increase as consumption declines

Economic slowdown, which has hit Venezuela for two consecutive years, had direct effects on Venezuelan households. The impact hit hardest the lowest social strata of the population, not only because the number of families in this social level soared, but also because they are consuming less staple products.

According to data released by the National Statistics Institute (INE), at the end of the first half of the year, 69.48 percent of the Venezuelan population, equivalent to 4,744,175 households, belonged to strata 4 and 5 of the population, which are those with the worst living conditions as far as housing, education and formal employment are concerned.

Whose victim am I?

They are marching in step to the same tune. There is a coordinated effort to position the idea. The Twitter hashtag  #YoSoyVictimaDeLaGuarimba (I'm a victim of "guarimbas", or protest barricades) can be read on all pro-government Twitter accounts, including those of the ruling United Socialist Party of Venezuela (PSUV), the National Assembly's Press Office, the state-run food distribution network PDVAL, state airline Conviasa, the Venezuelan embassies in foreign countries, radio stations and the huge media network responsive to the Government's interests and messages.

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