Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, November 18, 2011

November 18th, 2011

Economics & Finance

Central Bank: says economy grew 3.5%+ in Q3; agribusiness down 9.1%, Guayana industry falls by 2.1%
Venezuela's economy grew more than 3.5% during the third quarter of 2011 compared with the same period a year ago, according to the head of the Central Bank. Its economy expanded 2.5% in the second quarter and 4.8% in the first quarter versus the same periods in 2010, boosting the government's confidence in sustained growth following an 18-month recession that ended late last year. However, agribusiness dropped by 9.1%, and basic industries in Guayana fell by 2.1%. President Hugo Chavez is seeking to spur the economy ahead of an election next October. (Reuters, 11-15-2011;; AVN, 11-15-2011; More in Spanish: (Tal Cual, 11-18-2011;; El Mundo,; Agencia Venezolana de Noticias;ía-entró-en-nueva-fase-de-expansión-al-crecer-38-entre-enero-y-septiembre;ía-entró-en-nueva-fase-de-expansiía-en-lo-que-va-de-año-se-acerca-4; El Universal,

Reserves down U$D $3,6 billion in 45 days
Central Bank statistics show that by November 15 reserves stood at U$D 27.4 billion, down from U$D 31.1 billion on September 30, despite crude oil prices averaging U$D 100 PB. More in Spanish: (El Universal;

Current economic climate is unfavorable in Venezuela, according to the Latin American Economic Climate Index (ECI) published by German Ifo and Brazilian Fundación Getulio Vargas (FGV). (Veneconomy, 11-16-2011;

Barclays says ‘very strong’ PDVSA earnings support credit
Very strong” earnings for state- oil company Petróleos de Venezuela, S.A., reported earlier this week by Fitch Ratings, are good for the South American company’s credit, Barclays Capital said today in a note to clients.
Fitch Ratings said Nov. 15 in a statement that PDVSA, as the Caracas-based company is called, reported earnings before interest, taxes, depreciation and amortization, known as Ebitda, of U$D 32.1 billion for the 12-month period that ended June 30. (Bloomberg, 11-16-2011;

Only 7 Chinese companies benefit from Chinese Fund operations
Financial reports from the China Development Bank (CDB) for 2008, 2009 and 2010 show that its infrastructure loans to Venezuela have benefited 7 Chinese companies in the fields of hydrocarbons, electricity, mining and construction: PETROCHINA, SINOPEC, State Grid, CITIC Pacific, Tongling Nonferrous Metals Group, Goldwind A and Xi’an Electric Engineering. CDB loans are tied to contracts with Chinese companies. More in Spanish: (El Nacional, 11-18-2011;


Oil sector slows down; debt soars
The steady increase in revenues of state-run oil company Petróleos de Venezuela (PDVSA) has failed to spur oil activity in Venezuela, according to data provided by the Executive Office on the country's gross domestic product (GDP) in the third quarter of 2011. President Hugo Chavez, accompanied by Nelson Merentes, president of the Central Bank of Venezuela (BCV), announced GDP's results from July to September 2011. During this period, oil activity climbed 0.2% only, which is a slowdown compared to the second quarter of the year, when the oil sector GDP grew 0.8%. (El Universal, 11-16-2011;

International Trade

Exports up 53.4% in 3Q 2011, oil sales grew 47.8% due to price increases and volume was up 5%
Central Bank figures show exports rose to U$D 23,812 billion from August to October, an increase of U$D 15,520 billion over the same period last year, which is a 53.4% growth in exports led by petroleum sales which rose 478% due to price increases and a 5% growth in sales volume. More in Spanish: (El Mundo, 11-18-2011;,4--en-el-tercer-trimestre-2.aspx)

CADIVI has authorized over U$D 5.2 billion for food imports YTD
The National Currency Board (CADIVI) has authorized U$D 5.224 billion for food imports over the first 10 months this year, an increase of 12% over the same period last year. Key imports include wheat, corn, soya oil, powdered milk, malt, animal and vegetable oils. More in Spanish (Tal Cual, 11-18-2011;

Imports from Brazil increase by 104%
Brazil's agricultural exports grew 22.6% in October 2011 compared to the same month in 2010, despite the effects of the global crisis, according to the Brazilian Government. The Ministry of Agriculture says exports of agricultural products amounted to U$D 8.58 billion in October 2011 compared to U$D 7 billion in the same month last year. (El Universal, 11-16-2011;

Venezuela imports 850,000 tons of corn from the US
The United States has become one of the main providers of the corn to Venezuela, which is now the eighth largest client for corn produced in the US. According to data provided by the National Agriculture Statistics Service, US Department of Agriculture, Venezuela imported 850,000 tons of corn grain from the United States between January and October 2010. This year, purchases of the grain, which is a raw material for the production of concentrate feed for animals, declined 24% compared to 2010, when Venezuela purchased 1,120,995 tons from the United States. Despite the decline, imports represent a significant volume in the domestic market. (El Universal, 11-16-2011;


Chavez opponents vie for 2012 presidential ticket
Opposition leaders faced off in a rare live debate this week during campaigning for a primary in February where they are vying for the right to challenge President Hugo Chavez in a presidential vote. Echoing Venezuelans' top concerns, the candidates have all stressed beating crime and cutting unemployment as their priorities. Chavez mocked the opposition figures this week as the "horses of the Apocalypse."  The candidates are:
          Henrique Capriles-Radonski, youthful governor of Venezuela's second-most populous state leads polls ahead of the Feb. 12 primary contest. He wants to copy Brazil's "modern left" model of economic and social policies and has sought to appeal to traditional Chavez supporters by stressing inclusiveness
          Leopoldo López, a Harvard graduate and former mayor of the Chacao district in Caracas, who is the most-recognized abroad of the opposition candidates because of his long and highly publicized legal fight after being disqualified from politics in 2008.
          Pablo Pérez, governor of the oil-rich western state of Zulia, is running a close second in the polls and has the important endorsement of two heavyweight parties from the pre-Chavez era: Democratic Action and COPEI.
          María Corina Machado, recently elected as a legislator and an industrial engineer by training, was widely praised for her performance in this week's debate where she reeled off far more data and details than her rivals.
          Diego Arria, a former governor, minister and envoy to the United Nations in the early 1990s, appears to be positioning himself as something of an elder statesman for the opposition movement; and impressed viewers with deeper, different and more historically nuanced answers to most of the questions in this week's debate. (Reuters, 11-16-2011;

Chavez deploys troops to fight Venezuela crime wave
President Hugo Chavez has ordered thousands of National Guard troops onto the streets to tackle widespread violent crime. The troops have been placed under a new command known as the People's Guard. They will operate in the capital Caracas and two neighboring states - Vargas and Miranda. The new body will eventually comprise 3,650 troops, officials said. Rising levels of murder, kidnap and robbery in recent years have made Venezuela one of the most dangerous countries in Latin America. Rising crime has become a major source of public dissatisfaction, and a key campaign issue for opposition leaders seeking to challenge Mr Chavez in presidential elections in October 2012. (BBC, 11-18-2011;

Government forces sale of rental properties
President Hugo Chavez has signed a new rental law into effect over the weekend that obliges landlords to sell their property to tenants of more than 20 years at state-mandated discounts based on how long the space has been rented. (The Wall Street Journal, 11-15-2011;

President Chavez and Colombian President Santos will meet November 28 in Caracas, ahead of a meeting scheduled to launch the Community of Latin American and Caribbean nations, according to Venezuela’s Foreign Ministry. More in Spanish: (El Nacional, 11-18-2011;

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

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