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.

Tuesday, December 4, 2012

December 04th, 2012

Economics & Finance

Venezuela headed for economic adjustments despite oil boom
The last thing one expects from someone who has won a lottery is that after six years their debts are higher, they are having difficulties to meet daily expenses, and they have slightly reduced poverty. Yet, Venezuela may well be an exception. Despite the six-year oil boom, Hugo Chávez's performance on social affairs is quite poor with respect to his first term in office. Key indicators have clearly dropped. In fact, when he starts his new term (2013-2019) on January 10, he will be leading a country that is headed for major adjustments, including devaluation and a cut in expenditure. (El Universal, 12-03-2012;

Devaluation and spending cuts are likely to curb consumption in Venezuela
Consumption in Venezuelan households' consumption hit its highest level ever since 1998 during the 3rd quarter 2012, with a 7.8% leap over the same period in 2011, according to data from the Central Bank of Venezuela (BCV). Consumption has skyrocketed amid increased government spending on subsidies and welfare programs, wage increases, lower unemployment and cheap imports. However, a bleak outlook is forecast for 2013. Analysts believe that the Government will be forced to cut expenses and devaluate the Venezuelan bolivar. Both moves may have a negative impact on people's purchasing power. A likely reduction of spending would translate into fewer subsidies, modest wage raises and an economic slowdown. In turn, devaluation would lead to more expensive imports and boost inflation. (El Universal, 12-01-2012;

After the presidential election, inflation coming back up
In an effort to raise purchasing power, government authorities reined in price adjustments on regulated goods and services during presidential elections. Now that the political objective is past, staples will inevitably become more expensive if serious shortages are to be avoided. (El Universal, 12-01-2012;

Venezuela stock market rises 248% on optimism for political change from Chavez illness
Venezuela's stock market rose sharply the week ending November 30, with the Caracas Stock Index up 6.3% at 407,593, with investors betting that once again there is an increased probability for political change after President Hugo Chavez returned to Cuba for more cancer treatment. (Latin American Herald Tribune, 12-03-2012;

Pro government assemblyman says private industry grew by 6.1% late in 2012
According to Jesús Faría, a pro-government member of the National Assembly's Finance Committee, the nation's private industry grew by 6.1% during the last quarter of 2012. Faría made a contrast between his numbers and information that private industry "is allegedly besieged (by the Government) and afraid of expropriation." (AVN, 12-03-2012;


Basic industries run at 40% capacity despite higher staff costs
Industrial production in the Guayana region has failed as an alternative to oil; and has rather become a burden on public finances. The Central Bank reports that metal manufacturing fell 35.3% during the third quarter. As a result, basic industries resorted to borrowing money from the government to pay their staff. (El Universal, 12-01-2012;

Venezuela to invest U$D18 billion in oil by year end
Eulogio del Pino, PDVSA's Vice President for Exploration and Production says the state oil company, will invest U$D 18 billion this year and expects to invest a similar amount next year. He claims PDVSA is producing 3 million barrels a day, including 2.5 million barrels daily in the Orinoco belt. Del Pino also commented that Venezuela expects verdicts soon in some international arbitration cases. (Bloomberg, 12-02-2012;

Domestic gasoline consumption grew 13% in one year, up to 83,000 barrels daily during the third quarter, according to a report by OPEC. At this rate, Venezuela's growing gasoline consumption will only be second to Brazil. More in Spanish: (El Nacional, 12-04-2012;

Venezuela produces world class chocolate, despite having to deal with difficulties presented by the Chavez administration. Chocolates El Rey is producing some of the best chocolate in the world, which is exported to the United States, Europe and Japan. More in Spanish: (El Mundo, 12-04-2012;

International Trade

Venezuela, China reach agreements on electric, energy & oil
During high level bilateral meetings under way in Beijing, Venezuela and China entered into new agreements for cooperation on electric power and oil. Oil Minister Rafael Ramírez announced:"An agreement for the development of 900 megawatts of oil coke-based and carbon-based electric power has been entered into. New areas set for exploration, namely Junín 10 Sur, and the development of current fields have been agreed upon." (El Universal, 12-03-2012;

8,000 tons of powdered milk arrived into Puerto Cabello
317 containers bearing over 6.32 tons of powdered milk have arrived into Puerto Cabello from Argentina, sent by SANCOR UNIDAS to the CASA government agency. The same agency also received over 2,210 tons of frozen beef from SADIA and FERRERO DO BRASIL. More in Spanish: (El Carabobeño, 12-04-2012;


Nicolas Maduro calls for respect for President Chavez's life
Nicolás Maduro, Venezuela's Executive Vice President demanded respect for the life of the president of the Republic, Hugo Chavez, who is in Cuba undergoing a medical treatment. He criticized opposition leader’s use of President Chavez's health "to launch biased campaigns and demoralize the population". (AVN, 12-02-2012;; Latin American Herald Tribune,

Chavez expected at MERCOSUR summit in Brasilia
Jose Antonio Marcondes, Brazil's Ambassador to Venezuela says President Hugo Chavez is expected at a MERCOSUR summit meeting scheduled for this coming Friday in Brasilia. Another Brazilian government source says "There is the expectation that Chavez will take part in the summit, but there is yet no confirmation". The meeting will be Venezuela's first as a full member of the regional group, and will also consider the entry of Ecuador and Bolivia. More in spines: (El Nacional, 12-04-2012; and AVN;; El Universal,

15 new ambassadors have been appointed
According to an announcement by Communications and Information Minister Ernesto Villegas, President Chavez has named 15 new Ambassador by making use of his electronic signature in Havana. The report says new ambassadors have been posted to Belize, Dominica, Grenada, Mexico, Nicaragua, Dominican Republic, Iran, Iraq, Mozambique, Congo Republic, Gambia, Benin, Kenya, the Arab League, and MERCOSUR/ALADI. More in Spanish: (El Universal, 12-04-2012;; AVN;

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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