Obstacles to buy US dollars and raw materials lash manufacturing
Venezuela's industrial sector has not recovered from the losses reported during recession in 2009-2010
Manufacturing grew 3% by the third quarter of 2012 at a 5.2% rate that boosted all the economy contrary to 2011. Additionally, 2% progress was also reported from January-September with respect to last year, but it is still way from the 5.6% of the total GDP, according to the figures of the Central Bank of Venezuela (BCV).
The disappointing performance of the manufacturing sector is attributed to multiple reasons, but mainly to the overvalued foreign exchange rate, difficulties to buy US dollars to import raw materials and equipment, and shortages in raw materials produced by domestic basic industries.
For instance, US dollar sales to companies, the chairman of the Venezuelan Confederation of Industries (Conindustria) says, may take 120-150 days, and sometimes this may extend to 180 days.
This causes delays so as to pay suppliers. If suppliers abroad are not paid within the next few weeks, companies may have to face shortages amid high demand.
Furthermore, although US dollar purchase is vital for industries, the currency turns out to be one of the main trouble makers in view that the foreign exchange rate (VEB 4.3 per US dollar) has been overvalued since 2010. As a result, importing is cheaper than producing at home.
Translated by Jhean Cabrera
A group of some 60 Venezuelan economists from across the country and from different generations and backgrounds, has met regularly in the past couple of years and now has brought forth a document explaining the reasons of the current emergency and outlining specific proposals on how to address the serious economic crisis the country has plunged into over the last three years.