Economics & Finance
Leaders at Venezuela summit say a top priority is to safeguard economies against global woes
Leaders from across Latin America and the Caribbean pledged closer ties to safeguard their economies from the world financial crisis as they formed a new bloc on Saturday including every nation in the hemisphere except the U.S. and Canada. Several presidents stressed during the two-day summit that they hope to ride out turbulent times by boosting local industries and increasing trade within the region. (The Washington Post, 12-03-2011; http://www.washingtonpost.com/business/markets/leaders-at-venezuela-summit-say-safeguarding-economies-against-global-woes-a-top-priority/2011/12/03/gIQAkyOkOO_story.html)
Staple scarcity reaches top level
The highest year to date index of staple scarcity was registered last week according to the DATANALISIS firm, which says it closed at 23.8%. The greatest scarcity levels are in powdered milk, coffee and corn oil. The report claims scarcity levels have risen by 1.5% percentage points since last week. More in Spanish: (Últimas Noticias, 12-06-2011; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/escasez-de-alimentos-basicos-llega-a-su-tope.aspx)
Central Bank shows prívate investment dropped 43% in the past 3 years.
Central Bank figures show that between 2007 and 2010 private investment in machinery, equipment and buildings to increase production have dropped 43% to the lowest point in the last seven years. All indicated no change has taken place in 2011. More in Spanish: (El Universal, 12-06-2011; http://www.eluniversal.com/economia/111206/bcv-registra-que-en-tres-anos-la-inversion-privada-cayo-43)
José Manuel Puente, professor at IESA: Inflation stubbornly persists despite Law on Costs and Fair Prices
While neighboring countries have left high inflation rates behind, such an indicator persists in Venezuela; year after year, it weakens the purchasing power. Regulations, price control and seizures have fallen short to put the price index below two digits. The Venezuelan government has brought forward the Law on Costs and Fair Prices to try to reverse the situation. (El Universal, 05-12-2011; http://www.eluniversal.com/economia/111205/inflation-stubbornly-remains-despite-law-on-costs-and-fair-prices)
Pablo Baraybar: "Prices have never been raised high enough to break even"
The president of the Venezuelan Chamber of Food Processing Industries (CAVIDEA) believes that "there are ways to lower costs. We are waiting for government to reach out to us so that we can work together". (El Universal, 12-03-2011; http://www.eluniversal.com/economia/111203/prices-have-never-been-raised-high-enough-to-break-even)
PDVSA and Brazilian ODEBRECHT create a joint company
Presidents Chávez and Rousseff signed an agreement according to which Brazilian ODEBRECHt and PDVSA will work jointly in oil activities. They signed 11 cooperation agreements in total in the areas of energy, housing, agriculture, science and technology. (Veneconomy, 12-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28712&idc=4)
PDVSA gets U$D1.5 bln China loan for refinery
Venezuelan state-owned oil company PDVSA received a U$D 1.5 billion credit line from the China Development Bank to help build a heavy-oil refinery in Brazil, the Globo daily newspaper reported. PDVSA arranged the credit to help pay for its planned 40 percent stake in the 26-billion-real (U$D 14 billion) 230,000 barrel-a-day Abreu e Lima refinery near Recife, Brazil, the paper said, citing Rafael Ramirez, Venezuela's Petroleum and Mines minister. The refinery on Brazil's northeast coast is already under construction by Brazil's state-controlled oil company Petrobras. (Reuters, 12-04-2011; http://www.reuters.com/article/2011/12/04/brazil-venezuela-pdvsa-idUSN1E7B303W20111204; Veneconomy, 12-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28711&idc=4)
PetroCaribe ministers are ready to present agreements reached on Friday- to the heads of State and government summit to open once the meeting to create the Latin American and Caribbean States Community (CELAC) concludes, according to Rafael Ramírez, Oil and Mining Minister. (Veneconomy, 12-04-2011; http://www.veneconomy.com/site/index.asp?ids=44&idt=28710&idc=4 El Universal, 12-05-2011; http://www.eluniversal.com/economia/111205/venezuela-widens-energy-influence-through-petrocaribe)
Venezuela oil rises to U$D 107.05
Venezuela's weekly oil basket climbed to U$D 107.05 as oil prices continued to grind higher in international markets amidst higher hopes for a resolution of the debt crisis rocking Europe and world markets. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending December 2 rose to U$D107.05 from the previous week's U$D 105.53. (Latin American Herald Tribune, 12-02-2011; http://www.laht.com/article.asp?ArticleId=449208&CategoryId=10717)
Production of wire rods in Sidor is halted
The wire rod plant at steelmaker Siderúrgica del Orinoco "Alfredo Maneiro" (sidor) has been paralyzed for 11 days. Sources of the steel mill said that Sidor has stopped producing 7,800 tons of rebars and wire rods. They added that losses are estimated at U$D 3.5 million. (El Universal, 05-12-2011; http://www.eluniversal.com/economia/111205/production-of-rebars-in-sidor-is-halted)
Venezuela to form joint ventures with Mexico’s Gruma SAB
Venezuela will form two joint ventures with Gruma SAB, Mexico’s largest producer of corn flour, according to a statement published on the Mexican Presidency’s website. One company will produce corn flour and rice while the second will specialize in pasta and oatmeal, the statement said. The agreement was made during a meeting in Caracas between Mexico’s President Felipe Calderon and Venezuelan President Hugo Chavez. This move puts an end to Venezuela's plans to nationalize a Gruma subsidiary. (Business Week, 12-05-2011; http://www.businessweek.com/news/2011-12-05/venezuela-to-form-joint-ventures-with-mexico-s-gruma-sab.html; El Universal, 12-03-2011; http://www.eluniversal.com/nacional-y-politica/111203/calderon-chavez-pact-halts-nationalization-of-monaca and Bloomberg, http://www.bloomberg.com/news/2011-12-04/venezuela-to-form-joint-ventures-with-mexico-s-gruma-sab-1-.html)
Jet purchases from Brazil's EMBRAER confirmed
President Hugo Chavez confirmed a deal with Brazilian aircraft maker EMBRAER (EMBR3.SA) (ERJ.N) to supply 20 commercial planes for Venezuela's state carrier to increase Caribbean routes. Analysts have said the deal could revive ties between Venezuela and Brazil that have cooled since President Dilma Rousseff took over from Luiz Inacio Lula da Silva, who was close to fellow socialist leaders around the region. Brazil's BNDES development bank is helping to finance the deal. (Reuters, 12-03-2011; http://www.reuters.com/article/2011/12/03/us-venezuela-brazil-embraer-idUSTRE7B20NQ20111203)
Latin America and the Caribbean approve creation of Celac
The heads of State and Government of Latin America and the Caribbean Saturday approved the establishment of the Community of Latin American and Caribbean States (Celac) with the endorsement of the Declaration of Caracas and with Chile taking the pro-tempore presidency. President Hugo Chavez confirmed the approval of the Caracas Action Plan. He explained, however, that discussions would continue to find a formula for decision-making in the group, as Celac members failed to agree on whether they will use simple majority or consensus, Efe reported. (El Universal, 12-03-2011; http://www.eluniversal.com/nacional-y-politica/111203/latin-america-and-the-caribbean-approve-creation-of-celac)
CELAC summit: A definitive rejection of the U.S.?
President Hugo Chávez brands himself the standard bearer of all things revolutionary in Latin America – including the Community of Latin American & Caribbean States (CELAC), the new hemispheric organization that pointedly excludes the U.S. and Canada, and whose inaugural summit Chávez started Dec. 2 in Caracas. But in reality there's little revolutionary about CELAC. In fact, considering that the world for two centuries now has recognized the nations south of the Rio Grande as a distinct cultural and geopolitical entity, it's a wonder something like CELAC is only debuting this month. (Global Spin, 12-02-2011; http://globalspin.blogs.time.com/2011/12/02/latin-americas-celac-summit-a-definitive-rejection-of-the-u-s/)
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.