August 21th, 2012

Economics & Finance

Central Bank announces 5.4 % GDP growth in the second quarter

The Central Bank of Venezuela (BCV) says Gross Domestic Product (GDP) shows a 5.4% increase in the second quarter of the year as against 2011. The most significant rise was said to be in the construction sector (17.6%). Nelson Merentes, president of the institution, reports that the oil sector grew by 1%, whereas the manufacturing sector, which has a share of 14.1% in GDP calculation, climbed 0.4%. Overall business activity grew 9.8%, while financial institutions and insurance companies attained a 34% growth in the second quarter. (El Universal, 08-17-2012; http://www.eluniversal.com/economia/120817/central-bank-54-gdp-growth-in-the-second-quarter)

Domestic debt breaks 13-year record

The Venezuelan Government has broken all debt records in order to secure funding to cope with growing expenditures. Official economic strategy for the first half of 2012 has been to raise indebtedness in Venezuelan bolivars by selling financial institutions bonds and treasury bills for a total around U$D 16 billion. By discounting due and paid debt, payables amount to U$D 11.6 billion, the highest jump over the past 13 years in liabilities of the central government. The figure does not include state-run oil holding Petróleos de Venezuela (PDVSA), the National Development Fund (FONDEN) and other institutions used by the Chavez administration to generate debt. (El Universal, 08-18-2012; http://www.eluniversal.com/economia/120818/venezuelan-domestic-debt-smashes-13-year-record)

Unemployment at 7.4% percent in June, according to official sources

Elias Eljuri, President of the National Statistics Institute (INE, in Spanish), claims 4,000,000 jobs have been created since 1999 up to 2012, leading to a decline in the country's unemployment rate, which he said was 7.4% in June. (AVN, 08-17-2012; http://www.avn.info.ve/contenido/unemployment-rate-74-percent-june)

Commodities

PDVSA to sell RELIANCE 400,000 barrels a day

Petroleos de Venezuela SA, the state oil company, will sell as much as 400,000 barrels of oil a day to India’s RELIANCE Industries Ltd., according to statements made by Oil Minister Rafael Ramírez to the El Universal daily newspaper in Caracas. (Bloomberg, 08-20-2012; http://www.bloomberg.com/news/2012-08-20/pdvsa-to-sell-reliance-400-000-barrels-a-day-universal-reports.html; More in Spanish: El Universal; http://www.eluniversal.com/economia/120820/pdvsa-enviara-400-mil-bd-a-la-india-en-el-largo-plazo)

PDVSA to transfer PETROPIAR shares to CVG, Chavez says

President Hugo Chavez said that Petroleos de Venezuela SA, the state oil company, will transfer shares from PETROPIAR, a joint venture with CHEVRON, to state miner Corporacion Venezolana de Guayana to form a new oil company called Petro San Felix. (Bloomberg, 08-19-2012; http://www.bloomberg.com/news/2012-08-19/pdvsa-to-transfer-petropiar-shares-to-cvg-chavez-says.html; More in Spanish: El Mundo, http://www.elmundo.com.ve/noticias/petroleo/industria/chavez-anuncia-que-creara-una-nueva-empresa-petrol.aspx)

Production of the national iron and steel complex was 117,992 tons in this year’s first quarter whereas 67,000 tons were produced in the same period in 2011, said Ricardo Menéndez, Vice President for the Economic Productive Area this Friday during an inspection of the Turbio Iron and Steel Company (SIDETUR) in Guarenas, Miranda state. This is a 76% increase, said Menéndez. (Veneconomy, 08-17-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=31759&idc=3)

Venezuela, Nigeria raise June oil exports, Iraq cuts, Jodi says

Venezuela, the holder of the world’s largest oil reserves, and Nigeria both increased shipments of crude in June, while Iraq cut exports during the month, according to the Joint Organization Data Initiative. Venezuelan exports rose 10.6% from a month earlier to 1.72 million barrels a day and Nigeria shipped 2.49 million barrels a day, 18% more than May, according to statistics the governments submitted to OPEC and posted on JODI’s website today. Iraq, the second-largest producer in the 12-member Organization of Petroleum Exporting Countries, decreased shipments by 2% to 2.4 million barrels a day, Jodi data showed. (Bloomberg, 08-19-2012; http://www.bloomberg.com/news/2012-08-19/venezuela-nigeria-raise-june-oil-exports-iraq-cuts-jodi-says.html)

Local stock market up 137%

Venezuela’s stocks rose sharply for the week ending August 17, with the Caracas Stock Index up 8.24% to 277,482.

The jump was mostly due to the rise of Banco Provincial shares which rose 8.2% to VEB 98 on no apparent news. CORIMON shares rose 19.9% to VEB 361, while Mercantil Servicios Financieros shares rose 1.2% at VEB 82.50. The only stock losing ground was Banco de Venezuela, down 8.6% at VEB 2.65. Despite the gains, overall volume was low, with only 10,000 shares changing hands all week. (Latin American Herald Tribune, 08-20-2012; http://www.laht.com/article.asp?ArticleId=561554&CategoryId=10717)

Venezuela has electricity supply problems, Chavez admits

Venezuela continues to suffer from electricity supply problems, President Hugo Chavez said, claiming that the situation would be worse if he had never been elected. “I know that still here in the state of Bolivar, and above all in Ciudad Bolivar, there are serious problems, serious flaws in electrical energy. I know it, and also here, in San Felix ... Well, and in almost all of Venezuela!” Chavez said at a campaign rally Saturday in Sal Felix, a town in the southeastern part of the country. “Despite the gigantic efforts the government has made ... we still have not finished recovering, building a national electrical system,” Chavez said. (Latin American Herald Tribune, 08-19-2012; http://www.laht.com/article.asp?ArticleId=561236&CategoryId=10717)

International Trade

Southern agribusiness powerhouses pose threat to Venezuela's agricultural sector

Venezuela's business partners in the Common Market of the South (MERCOSUR) include two large producers of agricultural raw materials for export: Brazil and Argentina. Those two nations are also Venezuela's leading suppliers of food products. Agriculture is the most important economic activity of this South American bloc. Nevertheless, the largest concentration of agricultural land is found in Argentina and Brazil, which account for 61% of MERCOSUR's agricultural area whereas Venezuela's ratio of land for cereal production, for example, is merely 3.99%. Venezuela's entry into this market has set off a series of warnings from the local productive sector as a result of the country's unfavorable agricultural position with regards to its business partners. (El Universal, 08-18-2012; http://www.eluniversal.com/economia/120818/southern-powerhouses-pose-threat-to-venezuelas-agricultural-sector)

Logistics & Transport

Carabobo Governor charges port administration by Cubans is "bleeding the nation"

Governor Henrique Salas of Carabobo state is charging that scarcities and the high cost of living are largely due to corruption and Cuban mismanagement of port facilities at Puerto Cabello since President Chavez turned over key functions in the food distribution system to Cuba. The Castro regime now acts as Venezuela's purchasing agent abroad and also port administrator, which is "fabulous deal" for the Castro brothers. "Puerto Cabello handles 80% of cargo incoming to Venezuela and things have gone from bad to worse since the Cubans took over", says Governor Salas, who manages the state in which the port is located. Salas made his remarks during an interview with Miami daily "El Nuevo Herald". More in Spanish: (Notitarde; http://www.notitarde.com/La%20Costa/Administración-cubana-de-puertos-desangra-al-país/2012/08/20/127237; El Carabobeño, http://www.el-carabobeno.com/impreso/articulo/28643/gobernador-salas-los-puertos-venezolanos-son-un-fabuloso-negocio-para-los-castro-)

80% of roads said to lack cargo weight controls

Giovanni Bianco, an expert on roads at Carabobo University, says that around 80% of the roads and bridges in Venezuela fail to comply with heavy cargo weight controls, and charges centralization by the national government ended all supervision of structures that have been used for over 50 years. More in Spanish: (El Universal; http://www.eluniversal.com/nacional-y-politica/120821/estiman-que-80-de-las-vias-no-cuentan-con-control-de-carga)

Politics

Chavez lead shrinks in latest DATANALISIS poll in Venezuela

President Hugo Chavez’s lead narrowed in the latest poll from Caracas-based DATANALISIS seven weeks ahead of October’s national election, according to Jefferies Group Inc. Chavez had 46.8% support compared with 34.2% for opposition candidate Henrique Capriles Radonski, showing that his lead narrowed to 12.5 points from 15.3 percentage points in June, Siobhan Morden, head of Latin American fixed- income strategy at Jefferies in New York wrote today in a note to clients. The poll showed that 18.8% of those surveyed were undecided, according to the note. (Bloomberg, 08-20-2012; http://www.bloomberg.com/news/2012-08-20/chavez-lead-narrows-in-latest-datanalisis-poll-in-venezuela-1-.html)