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; http://www.eluniversal.com/economia/121203/venezuela-is-headed-for-economic-adjustments-despite-oil-boom)
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; http://www.eluniversal.com/economia/121201/likely-devaluation-and-spending-cuts-are-to-curb-consumption-in-venezu)
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; http://www.eluniversal.com/economia/121201/after-the-presidential-election-inflation-comes-to-the-fore)
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; http://www.laht.com/article.asp?ArticleId=653722&CategoryId=10717)
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; http://www.avn.info.ve/contenido/private-industry-grew-61-cent-late-2012)
Commodities
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; http://www.eluniversal.com/economia/121201/basic-industries-run-at-40-of-their-capacity-despite-higher-staff-cost)
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; http://www.bloomberg.com/news/2012-12-02/venezuela-to-invest-18-bln-in-oil-by-year-end-panorama-says.html)
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; http://www.el-nacional.com/)
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; http://www.eluniversal.com/economia/121203/venezuela-china-reach-agreements-on-electric-energy-amp-oil)
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; http://www.el-carabobeno.com/impreso/articulo/41262/al-puerto-carabobeo-arribaron-cerca-de-ocho-mil--toneladas-de-leche-entera-en-polvo)
Politics
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; http://www.avn.info.ve/contenido/nicolas-maduro-demands-respect-president-chavez039s-life;
Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=653639&CategoryId=10717)
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; http://www.el-nacional.com/ and AVN; http://www.avn.info.ve/contenido/cumbre-mercosur-tratar%C3%A1-avances-ingreso-venezuela-al-bloque; El Universal, http://www.eluniversal.com/internacional/121204/ingreso-a-mercosur-es-estrategico-para-chavez)
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; http://www.eluniversal.com/nacional-y-politica/121204/presidente-hugo-chavez-designa-a-15-nuevos-embajadores; AVN; http://www.avn.info.ve/contenido/presidente-hugo-ch%C3%A1vez-firm%C3%B3-designaci%C3%B3n-15-nuevos-embajadores) 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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