Economics &
Finance
Consumption soars 5.7% and US dollar
shortage intensifies
After a huge dose of public spending, including wage hikes
and increased subsidies, the Government has once again elevated private
consumption, which has soared to 5.7% in the first quarter 2012. The problem is
that higher demand forces authorities to increase and speed up the
authorizations of US dollars within an economy that is highly dependent on imported
products and finished goods. In order to meet demand, imports have climbed
48.5%. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/consumption-soars-57-and-shortage-of-us-dollars-intensifies)
GDP numbers point to deteriorated
manufacturing sector
Figures for the first quarter of 2012 released by the
Central Bank (BCV) confirm that the manufacturing sector is "quite deteriorated," according to
Carlos Larrazábal, head of the National Industry Federation (CONINDUSTRIA). He
said statistics for over 300 industries are very discouraging as they show
growth of only 0.7% during the first quarter this year, as opposed a reported
overall growth by 5.6% year to date. Food and agribusiness dropped by 6.9% and
has been falling for four consecutive quarters. Overall Central Bank
information shows that agriculture, industry, mining and oil have dropped 10
percentage points within national GDP in the 1998-2011 periods, during the Chavez
Administration. They steadily fell from 42.4% to 32.1% over all these years,
with the exception of 2003. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/gdp-numbers-point-to-deteriorated-manufacturing-sector;
and more in Spanish: El Nacional; http://www.el-nacional.com/; Tal Cual; http://www.talcualdigital.com/index.html;
El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/afirman-que-para-recuperar-la-industria-debe-cesar-el-cerco)
Private construction has dropped
10.6% over nine consecutive quarters,
said Venezuelan Construction Chamber chief Gilbert Dao. The Central Bank (BCV)
itself admits the few supplies obtained are being absorbed by official housing
programs. (Veneconomy, 05-21-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30589&idc=3)
Private sector holds over U$D 143
billion abroad, despite exchange controls
Central Bank figures on balance of payments reveal that
between the first quarter 2003 and the first quarter this year private sector
deposits abroad have grown 248% from U$D 41.268 billion to U$D 143.638 billion,
despite exchange controls. One of the means used to send capital abroad is the
instrument devised by the Government itself to obtain financing and reduce
liquidity domestically: these are the dollar denominated bonds issued by PDVSA
and the Finance Ministry, which companies and individuals purchase and sell
abroad in order to obtain hard currency. More in Spanish: (El Universal,
05-25-2012; http://www.eluniversal.com/economia/120525/sector-privado-tiene-depositos-por-143-millardos-en-el-exterior)
Draft antitrust bill sets more ways
to expropriate
The National Assembly is speeding up an Antitrust Law
which aims to establish that goods used to produce essential products could be
declared of public utility, and it provides for additional mechanisms for
expropriation. (El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/venezuelan-antitrust-bill-establishes-more-ways-to-expropriate)
Reserves lower due to drop in gold
prices
As gold prices continue to drop so do reserves held by Venezuela's
Central Bank, which holds 11,76 million troy ounces as 73% of its international
reserves. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/oro-cae-por-debajo-de-la-ultima-valoracion-hecha-a-las-reservas)
Commodities
PDVSA loses U$D 21 billion in China financing schemes
The recent amendment to the financing agreement between
China and Venezuela, approved Tuesday by the National Assembly, calls for PDVSA
to increase crude oil shipments to China to 530,000 BPD (barrels per day) at
discounted prices - which means the national oil company will receive U$D 21
billion less per year for exports. Venezuela has two agreements with China,
both paid for in oil. One is the "Great Volume Fund", a U$D 20
billion loan by China, of which 10 billion yuan are exclusively earmarked for
imports from China. This credit is repaid by exporting 300,000 BPD. The new
amendment raised the figure to 530,000 BPD. More in Spanish: (El Nacional,
05-25-2012; http://www.el-nacional.com/)
Crude oil prices under U$D 90 for
the first time in six months due
to an increase in US reserves to their highest level since 1990, due mainly to
fears on Greece's possible exit from the euro and the situation with Iran. More
in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/precio-del-crudo-cae-por-debajo-de-90-por-primera-vez-en-6-meses)
International Trade
Loopholes detected in Venezuela-Colombia trade agreement
Asdrubal Oliveros, of the ECOANALITICA research firm says
the recent trade agreement by Venezuela and Colombia is "significant progress" in bilateral
relations, but, that it continues to have "loopholes" in matters concerning transportation, investment
protection and dispute resolution that were previously covered by the Andean
Community. More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/estiman-que-hay-lagunas-en-el-acuerdo-comercial-con-colombia)
585 trade operations have been made
using the Sucre (Single
System of Regional Compensation, in Spanish) for U$D 208 million in the first
four months of this year, according to Central Bank (BCV) first Vice President
and chief of the Sucre Regional Monetary Council Eudomar Tovar today.
(Veneconomy, 05-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=30604&idc=2)
Logistics
& Transport
Port system "collapsing"
due to massive imports
Carlos Larrazábal, head of the National Industry
Federation, says the situation at Venezuelan ports has become "extremely serious" since the
Government took over control and launched a large scale import policy. "The problem is due to the larger volume of
imports. We imported U$D 13 billion during the first quarter and are headed
toward U$D 50 billion in imports, an unheard of figure for an economy this size".
State agencies such as CASA and PDVAL use Puerto Cabello - the nation's main
port - for permanent storage. Refrigerated containers bringing in food from
South American nations have been stored at Cartagena (Colombia), Colón (Panamá)
and Kingston (Jamaica). More in Spanish: (El Universal, 05-24-2012; http://www.eluniversal.com/economia/120524/empresarios-reportan-colapso-en-los-puertos-nacionales;
El Nacional; http://www.el-nacional.com/)
Serious delays reported at Puerto
Cabello
31 vessels were reported in the Puerto Cabello harbor
this Monday, bearing bulk, containers and assorted cargo. 23 ships remained in
the bay, waiting to dock, according to sources close to the Puerto Cabello Port
Authority. The situation is critical as Puerto Cabello is not equipped to
manage the overload and Carabobo State Legislator Neidy Rosal says it takes up
to two weeks to offload cargo that should normally be processed in 24 to 72
hours, mainly due to electricity outages which encumber all procedures. More in
Spanish: (El Carabobeño, 05-22-2012; http://www.el-carabobeno.com/litoral/articulo/34647/comunidad-martima-reporta-31-buques-en-la-baha-portea;
http://www.el-carabobeno.com/impreso/articulo/18163/-baha-portea-alberga-25-buques--fondeados-con-varias-cargas;
Notitarde; http://www.notitarde.com/notitarde/plantillas/notitarde/inota.aspx?idart=1647229&idcat=9849&tipo=2;)
Freightage to Venezuela 60% more
expensive
Antonio Landaeta, President of FEDECAMARAS in Carabobo
State says that due to the saturation at Puerto Cabello freightage to Venezuela
costs 60% more than shipping to countries like Colombia or Chile. He says
higher costs are due to delays in offloading cargo. 22 of the ships awaiting to
discharge cargo at Puerto Cabello are grain carriers and their offloading is
slow since there are only three or four docks equipped to service grain
shipments that take longer to offload than containers. More in Spanish: (Tal
Cual, 05-24-2012; http://www.talcualdigital.com/index.html
and El Universal, 05-23-2012; http://www.eluniversal.com/economia/120523/denuncian-retrasos-en-el-puerto-de-puerto-cabello)
Multinational companies holding Venezuela
inventories in Panama
According to Panamanian business sources, warehouses in the Colón Free
Zone in Panama are increasingly storing more merchandise destined to Venezuela
due to decisions by multinational companies to lower inventories held locally here
due to the risk of expropriation. This seems to be particularly the case with
pharmaceutical and personal care products. More in Spanish: (El Nacional,
05-24-2012; http://www.el-nacional.com/)
Politics
Chavez reappears, leads cabinet
meeting
President Hugo Chavez reappeared on Tuesday in a live
television broadcast, the first time he has been seen in public view since
returning from cancer treatment in Cuba almost two weeks ago. Chavez spoke in a
strong voice and did not appear tired during the broadcast, which lasted more
than two hours. He made no reference to his health, of which few details are
known. (Reuters, 05-22-2012; http://www.reuters.com/article/2012/05/23/venezuela-chavez-idUSL1E8GN0BO20120523;
The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-reappears-on-television-leading-cabinet-meeting-following-cancer-treatment/2012/05/22/gIQAdt28iU_story.html)
Colombian and Venezuelan armies
militarize the border
Colombia and Venezuela have militarized both sides of the
border in order to persecute members of the Colombian Revolutionary Armed
Forces (FARC) who last Monday killed 12 Colombian troops. The
Colombia-Venezuela Northwest border was taken over by security forces from both
countries in an attempt to lay siege to the members of the FARC Front 59 that
is based in Venezuela, according to Colombian authorities. (El Universal, 05-23-2012; http://www.eluniversal.com/nacional-y-politica/120523/colombian-and-venezuelan-armies-militarize-the-border)
Venezuela sent Syria 35,000 tons of
diesel oil
A Venezuelan ship loaded with 35,000 tons of diesel oil
has arrived to port in Syria, according to that nation's Oil Minister Sufian
Alao. Syrians have been facing fuel scarcities for months due to international
sanctions that have led Western oil companies to interrupt supplies to this
country. More in Spanish: (El Mundo, 05-24-2012, http://www.elmundo.com.ve/noticias/economia/energia/barco-venezolano-con-35-000-toneladas-de-diesel-ll.aspx)
....and rejects US State Department
human rights report
A Department of State reports points out Cuba and
Venezuela as countries where respect for human rights concerns the United
States. The "Human Rights Practices
2011" report says the Chavez regime has continued using the judiciary
to "intimidate and persecute
political, union and business leaders, and civil society". The Chavez
government called the report an "unacceptable
interference into internal affairs".
More in Spanish: (AVN, 05-25-2012; http://www.avn.info.ve/contenido/venezuela-rechaza-informe-ddhh-presentando-departamento-estado-estados-unidos
and El Universal; http://www.eluniversal.com/internacional/120525/critican-situacion-de-derechos-humanos-en-cuba-y-venezuela)
Romney calls Chavez, Castro a "great danger"
Republican candidate Mitt Romney terms the Castro regime in Cuba and
Venezuelan President Hugo Chavez a "great
danger" to the United States and the world and says the United States
should pay more attention to Latin America. According to the GOP presidential
candidate Chavez and Castro "are a
great danger to the United States and to people around the world... we must promote
our values, free enterprise, democracy". More in Spanish: (El
Universal, 05-24-2012; http://www.eluniversal.com/internacional/120524/romney-tilda-a-chavez-y-a-castro-de-peligrosos-para-estados-unidos)
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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