November 23th, 2012

Economics & Finance

Venezuela posts 5.2% economic growth in 3rd quarter; important areas drop

Venezuela’s economy grew 5.2% in the third quarter over the same period last year, officials say, crediting both the private sector and an increase in government spending. “Venezuela has entered a new phase in its stable, sustainable growth,” Planning Minister Jorge Giordani said at a news conference during which he and the Central Bank president announced the quarterly financial results. Despite GDP growth, Central Bank data shows important industries dropped severely: metal products (-13,8%), electric machinery (-10,9%), and vehicles (-8,7%). A very important area, such as the manufacture of basic metals within the public sector dropped 35,3% due to labor and operational problems in Guayana region's basic industries. (The Washington Post, 11-20-2012; http://www.washingtonpost.com/business/venezuela-posts-52-percent-economic-growth-in-3rd-quarter/2012/11/20/55acf998-3359-11e2-92f0-496af208bf23_story.html; El Universal, 11-21-2012; http://www.eluniversal.com/economia/121121/venezuelas-52-economic-growth-attributed-to-heavy-public-expenditure; Fox News, http://www.foxnews.com/world/2012/11/20/venezuela-posts-52-percent-economic-growth-in-3rd-quarter/; and more in Spanish: Tal Cual, 11-23-2012; http://www.talcualdigital.com/index.html)

Central Bank disposable reserves down 60% over six months

Reserves available for imports and debt repayment continue to drop.  Official figures at the close of the third quarter are U$D 2.242 billion, which is a 60% drop since January; and a 93% drop in four years. More in Spanish: (El Universal, 11-23-2012; http://www.eluniversal.com/economia/121123/las-reservas-liquidas-del-bcv-descienden-60-en-nueve-meses)

As devaluation rumors multiply and replacement costs go up, the rise of the black market dollar could become an obstacle in the government’s plans to put a stop to inflation and supply market shelves for the Christmas Season. Although there are no official figures for the parallel market, ECONOMÉTRICA estimates almost 20% of imports take place through this type of operations. (Veneconomy, 11-22-2012; http://www.veneconomy.com/site/index.asp?ids=44&idt=32922&idc=2)

Analysis: Black market surge presages Venezuela devaluation

Called by a host of nicknames to evade Venezuela's strict currency controls, U.S. dollars are in such hot demand that the black market price has soared to nearly four times the local bolivar money's official fixed rate. Added to existing fiscal pressures for President Hugo Chavez's socialist government, the new illegal exchange rate for dollars is making a devaluation look inevitable, probably around year end or in early 2013, economists and businessmen say. (Reuters, 11-21-2012; http://www.reuters.com/article/2012/11/21/us-venezuela-currency-idUSBRE8AK0R820121121)

Dual exchange system reported to be under study

As SITME continues allocating foreign currency at minimum levels and banks have not received Forex for several days, economic authorities continue to debate exchange strategy for 2013. Sources claim the Planning and Finance Ministry wants to keep the official rate at 4.30 VEB to the U$D, for priorities, and establish a new rate estimated at 50% above current levels. More in Spanish: (El Nacional, 11-23-2012; http://www.el-nacional.com/; El Mundo, http://www.elmundo.com.ve/noticias/economia/politicas-publicas/restriccion-de-la-oferta-de-divisas-alimenta-expec.aspx)

Foreign debt rises above USD 100 billion ceiling

Over the past 12 months, the central government's spending, after inflation, has climbed by 26%. High oil prices and increased tax collection have failed to meet growing spending. Therefore, the government has been forced to issue new debt bonds. Central Bank data indicates that, for the first time ever, by the end of the third quarter Venezuela's foreign debt broke the U$D 100 billion ceiling and currently stands at U$D 102.3 billion, an 103% jump in four years and U$D 5.5 billion in July-September alone. (El Universal, 11-22-2012; http://www.eluniversal.com/economia/121122/venezuelas-foreign-debt-breaks-usd-102-billion-ceiling)

Number of private employers shrank by 19% in the past year

The number of employers has gradually shrunk, as fewer and fewer numbers are recorded by the National Statistics Institute (INE). The government agency disclosed that in the past 12 months, the number of employers plunged by 19%. In October 2012 there were 377,865, compared to 466,309 one year ago, that is, 88,444 fewer employers. (El Universal, 11-22-2012; http://www.eluniversal.com/economia/121122/number-of-private-employers-shrinks-by-19-in-the-last-year-in-venezuel)

Venezuela registers one of the worst business environments in the region

An Economic Climate Index for Latin America prepared by Brazil's Getulio Vargas Foundation shows the regional index rose from 4.8 to 5.2 points in October this year. The index is taken every three months and is the result of an evaluation by 140 specialists from 18 nations. The countries that have the highest points are Brazil

(6.1), Bolivia (6), Chile (5.9), Perú (5.8), Paraguay (5.5) and Uruguay (5.3). Argentina and Mexico came out with 4.9, and Venezuela received 3.4 points. More in Spanish: (El Universal, 11-23-2012; http://www.eluniversal.com/economia/121123/venezuela-entre-los-paises-con-peor-clima-de-negocios-de-la-region)

International Trade

Private and public sectors imports over U$D 40 billion

The Central Bank of Venezuela (BCV) says that economic growth reported in 2012 is due, among other reasons, to a higher supply of imported products and raw materials. In fact, the bank's numbers show that imports increased by 22%. By the end of the third quarter, private and public sectors' imports totaled U$D 40.7 billion, whereas last year they stood at U$D 33.2 billion. (El Universal, 11-21-2012; http://www.eluniversal.com/economia/121121/private-and-public-sectors-import-over-usd-40-billion)

Logistics & Transport

Gov't takes action to clear Venezuelan ports

The Ministry of Sea and Air Transport will take special steps though December 29 to clear the ports of La Guaira and Puerto Cabello, ranging from extended business hours in public banks to relaxation of the road transport of containers on Sundays, to the haulage of empty containers to areas outside the port. Public banks have now extended their working hours in order to improve port operations. The special schedule is in effect at agencies in Catia La Mar and Maiquetía, in Vargas State; and at Puerto Cabello, in Carabobo State. The banks will operate weekdays from 8:30 AM to 6 PM; and Saturdays from 8:30 AM to 4 PM, in order to expedite port service tariff payments and payments for storage, and surface and dock use. More in Spanish: (AVN, 11-23-2012; http://www.avn.info.ve/contenido/banca-pública-establece-horario-especial-para-apoyar-labor-puertos-del-país and El Universal, 11-21-2012; http://www.eluniversal.com/economia/121121/govt-takes-action-to-clear-venezuelan-ports)

Increase in pilot's fees being considered at Puerto Cabello

The shipping community in Puerto Cabello reports port authorities is considering an increase in pilot's fees by the National Aquatic Areas Institute, up to VEB 2,200, which would have to be paid by all shipping companies in order to enter the Port of Puerto Cabello and dock at the main terminal. More in Spanish: (El Carabobeño, 11-23-2012; http://www.el-carabobeno.com/impreso/articulo/39989/-navieros-sern-obligados-a-cancelar-2.200-bolvares-por-maniobras-de-pilotaje-)

Politics

Assembly members urged to support Chavez gubernatorial nominees

Diosdado Cabello, President of the National Assembly has urged pro-Chavez assembly members to support gubernatorial candidates nominated by President Chavez. Cabello made his statement in a visit to Apure, which was the sixth visit by party leadership to states where there are multiple nominees and in-party strife in upcoming December 16th gubernatorial races. (El Universal, 11-23-2012; http://www.eluniversal.com/nacional-y-politica/121123/cabello-diputados-deben-apoyar-a-candidatos-de-chavez)