December 28, 2012

Economics & Finance

Economy grew 5.5% in 2012

Nelson Merentes, President of Venezuela's Central Bank reports that gross domestic product (GDP) is expected to grow 5.5% by the end of the year, above the level estimated in the budget for fiscal year 2012. The strongest sector was construction sector with 16.8% growth which is 1.2% of total GDP. Expansion in this sector is attributed to the Great Housing Mission. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/central-bank-venezuelas-economy-hikes-55-in-2012; AVN, http://www.avn.info.ve/contenido/gdp-grew-55-2012)

Merentes calls inflation a problem

Central Bank President Nelson Merentes says that although price increases have slowed down, "inflation continues to be a problem for the economy", and calls for an increase in public and private production, as well as more efficiency in food distribution. This year's inflation goal had been projected between 20- 22% and year to date inflation was 18% by November: Final results for the year have not been announced. More in Spanish: (El Universal; http://www.eluniversal.com/economia/121228/merentes-admite-que-la-inflacion-es-una-dificultad)

Inflation reported at zero for 19 controlled items

Inflation was zero for 19 items controlled by the Superintendent for Fair Costs and Prices (SUNDECOP) since April 2012, which includes basic bathroom, cleaning, and drink products. Karlin Granadillo, head of SUNDECOP says the consumer price index (CPI) dropped by 13% last April on 19 controlled products, and there was no change in prices for the remainder of the year. She claimed that increasing prices due to alleged devaluation is just speculation. (AVN, 12-26-2012; http://www.avn.info.ve/contenido/inflation-rated-zero-19-regulated-items)

Domestic debt service projected at U$D 22 billion in 2013-2014

Information from the Planning and Finance Ministry shows that total debt service payments in 2013-2014 will be U$D 33.9 billion, 65% of which (U$D 22 billion) is domestic debt, which has risen by 306% from U$D 14.1 billion at the end of 2008 to U$D 57.3 billion by September 2012. (El Universal, 12-25-2012; http://www.eluniversal.com/economia/121224/venezuelas-domestic-debt-service-at-usd-22-billion-in-2013-2014)

Difficulties in acquiring FOREX and obtaining raw materials hit manufacturing

Central Bank figures show Venezuela's industrial sector has had a constant lackluster performance, and lags behind production levels recorded in 2008. The future looks bleak, with looming stagnation due to difficulties in obtaining foreign exchange and raw materials. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/obstacles-to-buy-us-dollars-and-raw-materials-lash-manufacturing)

Banking intermediation dropping

Banking is among the best performing sectors this year, with real annual profits increasing equity by 30%. However, intermediation has been under 55% throughout the year, and dropped to 50.88% in November, according to the Banking Superintendent's office (Sudeban). (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/banking-intermediation-lashed-by-matured-bonds-payable)

Government extends standing ban on workforce reduction to all of 2013

The Government has again extended the standing ban on dismissing public and private sector employees to all of 2013. Under current rules no worker can be fired without just cause previously approved by a local Inspector from the Labor Ministry. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/gobierno-nacional-extiende-inamovilidad-laboral-durante-todo-2013;  El Universal, http://www.eluniversal.com/economia/121228/decretan-inamovilidad-laboral-durante-todo-2013)

49.4% of all unemployed are aged 24-44

Historically, the youngest population (Age 15-24) has been the hardest hit by unemployment. However, official data shows that in November those aged 25-44 faced more difficulties getting a job. According to data from the National Statistics Institute (INE), some 873,513 were unemployed last month, of which 431,411 (49.4%) were aged 25-44. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/out-of-the-total-unemployed-494-are-aged-24-44)

Government seeks to consolidate a communal system in 2013

Although little progress has been made in implementing a system that calls for communities to take part in producing goods and services - so little that in October President Chavez showed his disappointment and even threatened to eliminate the Ministry of the Communes - government and party leaders continue to call for full implementation during 2013. (El Universal, 12-26-2012; http://www.eluniversal.com/economia/121226/venezuela-aims-at-consolidating-the-economic-communal-system-in-2013)

Venezuela stock market up 298%

After rallying sharply in the week ahead of the Gubernatorial elections, Caracas stocks lost 1.9% the week ending December 21 to close at 465,336 on little volume. Only four stocks changed price: Mercantil Servicios Financieros A lost 3.6% at Bs. 135, while the class B shares lost 4.3% at Bs. 135. Banco Provincial lost 0.6% at Bs. 164, while CANTV was the only gainer, rising 0.6% at Bs. 17.1. (Latin American Herald Tribune, 12-24-2012; http://www.laht.com/article.asp?ArticleId=658459&CategoryId=10717)

Commodities

Domestic hydrocarbon market is plagued by distortions and subsidies

Venezuela's growing domestic hydrocarbon market is plagued by distortions and subsidies that show up in high demand and fitful supply. Neither the Petroleum and Mining Ministry or state-run oil company PDVSA provide in-depth reports on the size of the domestic market during 2012, but a few weeks ago, PDVSA's chairman, Rafael Ramírez, remarked that gasoline demand is at 298,000 barrels per day (bpd) and that this year the power sector's demand has been tremendous. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuelas-oil-domestic-market-accumulates-distortions-and-subsidies)

International Trade

Venezuela will comply with MERCOSUR trade agreements next month

Trade Minister Edmée Betancourt reports Venezuela has reached tariff nomenclature agreements within MERCOSUR and had moved ahead in reducing tariffs on several products. She reported firm agreements had been reached with Argentina in 609 sensitive items and with Brazil on another 777 items. More in Spanish: (AVN, 12-28-2012; http://www.avn.info.ve/contenido/venezuela-acuerda-c%C3%B3digos-arancelarios-pa%C3%ADses-miembros-del-mercosur; El Mundo, http://www.elmundo.com.ve/noticias/economia/internacional/3-acuerdos-arancelarios-con-el-mercosur-comenzaran.aspx)

Venezuela is Spain's main weapons client

Venezuela was reported at the top of the list of countries buying arms from Spain during the first half of 2012 and has held this position for two consecutive years, according to Spain's Economy Ministry. From January-June, Hugo Chávez's Government purchased U$D 217.54 million in weapons, which is 26.5% of total arms exports reported by Spain. (El Universal, 12-27-2012; http://www.eluniversal.com/economia/121227/venezuela-is-spains-main-buyer-of-weapons)

Logistics & Transport

Guanta Port modernization reportedly advancing

Port authorities report the Government has invested over VEB 70 million through the Bolivarian Port Authority (BOLIPUERTOS), in order to improve Guanta's port infrastructure, which include refurbishing docks and roadways within the port, storage facilities, electric repairs, medical offices and other facilities. More in Spanish: (Bolipuertos, 12-28-2012 http://www.bolipuertos.gob.ve/noticia.aspx?id=6559)

Politics

Chavez delegates administrative responsibilities to his vice president

Hugo Chavez has delegated some administrative responsibilities to Venezuela's vice president, allowing his close confidant to make decisions related to the budget, expropriations and government debt. Chavez passed on the duties to Vice President Nicolas Maduro on Dec. 8, three days before the socialist leader underwent cancer-related surgery in Cuba. The measure took effect Wednesday upon its publication in the Official Gazette. (Fox News, 12-26-2012; http://www.foxnews.com/world/2012/12/26/venezuela-chavez-delegates-administrative-responsibilities-to-his-vice/#ixzz2GCF1CYfV; El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/venezuelas-vice-president-bestowed-economic-decision-making-capacity; Bloomberg, http://www.bloomberg.com/news/2012-12-26/venezuela-s-maduro-can-issue-debt-expropriate-assets.html; http://www.bloomberg.com/news/2012-12-25/chavez-gives-venezuela-economic-orders-in-christmas-eve-call.html; The Washington Post, http://www.washingtonpost.com/world/the_americas/venezuelas-chavez-delegates-administrative-responsibilities-to-his-vice-president/2012/12/26/c1270bd4-4f81-11e2-835b-02f92c0daa43_story.html)

Officials claim Chavez improving after surgery

President Hugo Chavez is improving after a cancer operation in Cuba and has started exercising, officials said on Monday, amid doubts over whether the former soldier is in good enough health to continue governing. Vice President Nicolas Maduro said he had spoken by phone with Chavez, who was walking and doing exercises as part of his treatment. "We've gotten the best present we could get this Christmas: a phone call from our commander president," Maduro said on state television. Information Minister Ernesto Villegas said earlier in the day that Chavez had "shown a slight improvement in his condition," without providing details. (Reuters, 12-25-2012; http://www.reuters.com/article/2012/12/25/venezuela-chavez-idUSL1E8NO59620121225; AVN, 12-25-2012; http://www.avn.info.ve/contenido/chavez-greets-venezuelan-children-thank-people039s-prayers; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=658652&CategoryId=10717; Fox News, http://www.foxnews.com/world/2012/12/25/vp-says-spoke-with-chavez-who-is-up-walking/)

Cabello says he supports Maduro

National Assembly President Diosdado Cabello said he will carry out orders from President Chavez, and added that "the opposition thinks that January 10th is the day they will be rid of Chavez" and hope that "Diosdado and Nicolás are fighting. Let them continue to believe I am going to disobey an order from the Commander - The Commander was so clear and explicit, besides, orders must be followed by all who call ourselves "chavistas". The Commander said that if for some reason, any reason, he should become unable to lead, the Commander designated comrade Nicolás Maduro, in the knowledge that the revolution will not be lost."  More in Spanish:  (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/cabello-con-maduro-no-se-perdera-la-revolucion)

Chavez has spent 201 days in Cuba and there has been no medical report

National Assemblyman Carlos Berrizbeitia charges that President Chavez has spent 201 days in visits and rest in Havana due to cancer treatment and that there has been no medical report. Berrizbeitia says the President has made 11 trips to Cuba, made 6 requests to the National Assembly for permission to leave the country, and has spent 106 days convalescing and 95 resting in Cuba. More in Spanish: (El Universal, 12-28-2012; http://www.eluniversal.com/nacional-y-politica/121228/chavez-lleva-201-dias-en-cuba-y-no-hay-informe-medico)

Colombia's Santos reaffirms support for Chavez

Colombian president Juan Manuel Santos reaffirmed his support for President Hugo Chavez, who is recovering after a surgery in Havana. Santos called vice-president Nicolas Maduro, and expressed Colombia's willingness to collaborate with Venezuela under any circumstance. (AVN, 12-25-2012; http://www.avn.info.ve/contenido/colombia039s-santos-reaffirms-support-chavez; El Universal, http://www.eluniversal.com/nacional-y-politica/121225/santos-gets-ready-to-attend-chavezs-inauguration)

Uruguayan president foresees a big question mark for Venezuela without Chávez

Uruguayan President José Mujica says he cannot provide "a sensible, categorical answer" about what may happen in Venezuela if Hugo Chávez does not recover from cancer. Mujica stated that he rather has "questions" regarding the future of the country in the event that the president steps down. "I have questions, as any person would, because Chávez has exerted a tremendous influence on low-income Venezuelans and the Armed Forces, and finding a person able to do so is yet to come. Questions arise," the Uruguayan leader said. (El Universal, 12-26-2012; http://www.eluniversal.com/nacional-y-politica/121226/uruguayan-president-sees-a-big-question-mark-in-venezuela-without-chav)



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.