Venezuela sees economy skirting recession-report

Source: Reuters

Venezuela sees economy skirting recession-report
Sun Aug 23, 2009 1:45pm EDT

CARACAS, Aug 23 (Reuters) - Venezuela's economy, which shrank for the first time in five years in the second quarter, will likely avoid recession and could grow modestly this year, the finance minister said in an interview published on Sunday.

Finance Minister Ali Rodriguez said the government was working to stimulate growth and an expansion of 1 percent was not out of the question, according to an interview with local newspaper Ultimas Noticias.

"There is no recession. By convention, a recession exists when there are two consecutive quarters of negative growth. We are not in that situation," Rodriguez said.

The economy shrank 2.4 percent in the second quarter as the government reduced spending to compensate for lower oil revenue while the nationalization of swathes of the economy dampened the private sector's appetite for investment.


Read more: http://www.reuters.com/article/bondsNews/idUSN2312540820090823?rpc=401&

Their continued success is based on, as all successes are, a need of something that they can provide... oil and natural gas.

have been at least partly nationalised so it helps confirm that Hugo did pursue the correct policies.:thumbsup:

You'd be shocked to see who is profiting and who isn't. I'll give you a clue... it's political and not uniform.

Let's have at it.

This period of relative calm in Venezuela is dependent, as I originally said, on the strength of their oil exports, that is the price they can receive for it. During the mid to late 2000's, oil prices were very high worldwide and most people in Venezuela could do fairly well (minus health hazards created by oil drilling, which isn't isolated to them alone either). However, the true quality of policies are seen not in good times where the fat is flowing but in bad times when it is not. Those bad times have occurred in Venezuela's not too distant past. In the 90's and early 2000's.

http://news.bbc.co.uk/2/hi/business/1925514.stm

The middle class of Venezuela suffered greatly during this period, the poor even more so. When oil prices fell again in this past year, this scenario is replaying itself again. The occurrences of the 1990's and early 2000's, which incidentally saw armed riots and nearly the ousting of Hugo Chavez, will occur again.

Their nation's economy is driven in no small part by oil and more specifically oil prices. When prices drop, their stability drops as well. So, to mark the past five years as a success in policy-making would be akin to saying that 1950's America was successful in policy-making. It, in fact, isn't true, but coincidence. In fact, Venezuela's economy is very similar to Alaska's in many respects. And, Sarah Palin's "success" is quite similar to Hugo Chavez "success".

Hugo Chavez was "nearly ousted" because he was succeeding, not because he was failing.

And comparing Chavez to PALIN is too funny for words. :rofl:

And if you're going to mock me, the least you could do is grow up.

the Washington consensus. And that's why, to this day, there are hit pieces on his successful government accusing him of everything from stealing oil rigs to attacking synagogues.

after he was nearly ousted by a US backed coup. This war on Venezuela by DC is because Chavez has proven that resource rich countries like Venezuela can succeed on their own, without the World Bank and all the other Global criminal operations. That is not acceptable to the Globalists. Read John Perkins' 'Diary of an Economic Hitman' to get an idea of why Chavez and any other uppity citizen of an oil rich country who harbors the outrageous idea that their oil belongs to them.

He has been re-elected in every election since then and remains extremely popular.

He is a slap in the face to the power mongers who for far too long, kept countries like Venezuela in a state of poverty and oppression.

I'm sure there will be fluctuations in Venezuela's economy, just like any other country. I also think they have smarter people running their government than we had here who are fully aware they cannot run on oil alone. But for a start, keeping their own resources under THEIR control, has helped reduce poverty by over 22%. That is called success. During the same period, poverty rates grew in the US.

I hope they, and others, can work toward a more sustainable model.

That said, your link is from seven years ago. Is there anything more recent?

I was merely remarking that the policies of the Venezuelan government worked well in times of high oil prices but in the past (1990's) and at the present they are not working to keep Venezuela growing. You are right however, as with almost all Central and South American nations, they need to diversify to gain a more stable economy. It is remnant of cash crop colonialism that they are not.

The world surely isn't perfect. But I would actually expect Venezuela to be doing a better job. If they are they not, please link.

"No doubt someone is going to claim responsibility when in actuality...

Their continued success is based on, as all successes are, a need of something that they can provide... oil and natural gas."


You're free to believe anything you want to about who the "someone" is. I meant it generally. If you don't think so, that's your own prerogative.

Venezuela HAS been doing a better job than many industrialized nations because oil is still in demand. Yet it is noteworthy to mention that as the original post has mentioned, that the Venezuelan economy is shrinking because of the drop in oil prices back to a more natural (though still slightly overpriced) level. The prosperity they enjoyed was NOT the norm it was do to an aberration in the price of oil caused by OPEC as punishment for our activities in the Middle East (just as they did in the 1970's).

The quality of Venezuela's leadership (if you indeed want to talk about that, even though I had not) will be dependent on the price of oil because as we've seen in the past (by my other link) and in the present (by the original post) that as oil prices drop, so does the Venezuelan economy.

Have they done better than some? Yes, under the conditions present for a five year period which were aberrant in nature. To measure their success solely on this period of Chavez' leadership is faulty. His success must be seen based on the entirely of his leadership, in good times and in bad. In good times he has been good to his people, and in bad they have suffered greatly (even to the point of armed riots and nearly a coup might I add). So he's 50/50. When the world is going well so is he. When it is going bad. He isn't.

in which there was a global economic meltdown.

Baloney.

You suggest that we cannot take into account his bad years because they occurred during the late 90's early 2000's? Because of a recession?? What recession??? They were not hit with the dot com bust.

at the beginning of his tenure.

And his government had to dig out Venezuela starting with a new constitution. The economy started showing growth in 2003. Given that in the interim, we tried to get him killed, his government did a good job of putting his country on track. Let's hope Obama can do as well.

Update: The Venezuelan Economy in the Chávez Years
By Mark Weisbrot and Luis Sandoval

February 2008

Mark Weisbrot is Co-Director and an Economist and Luis Sandoval is a Research Assistant at the Center for Economic and Policy Research in Washington, DC.

Executive Summary

Venezuela has experienced very rapid growth since the bottom of the recession in 2003, and grew by 10.3 percent in 2006 and about 8.4 percent last year. The most commonly held view of the current economic expansion is that it is an "oil boom" driven by high oil prices, as in the past, and is headed for a "bust." The coming collapse is seen either as a result of oil prices eventually declining, or the government's mismanagement of economic policy.

There is much evidence to contradict this conventional wisdom. Venezuela suffered a severe economic growth collapse in the 1980s and 1990s, with its real GDP peaking in 1977. In this regard it is similar to the region as a whole, which since 1980 has suffered its worst long-term growth performance in more than a century. Hugo Chávez Frías was elected in 1998 and took office in 1999, and the first four years of his administration were plagued by political instability that had a large adverse impact on the economy. (See Figure 2). This culminated in a military coup that temporarily toppled the constitutional government in April 2002, followed by a devastating oil strike in December 2002-February 2003. The oil strike sent the economy into a severe recession, during which Venezuela lost 24 percent of GDP.

But in the second quarter of 2003, the political situation began to stabilize, and it has continued to stabilize throughout the current economic expansion. The economy has had continuous rapid growth since the onset of political stability. Real (inflation-adjusted) GDP has grown by 87.3 percent since the bottom of the recession in 2003. It is likely that the government's expansionary fiscal and monetary policies, as well as exchange controls, have contributed to the current economic upswing. Central government spending increased from 21.4 percent of GDP in 1998 to 30 percent in 2006. Real short-term interest rates have been negative throughout all or most of the recovery (depending on the measure—see Figure 4).

The government's revenue increased even faster than spending during this period, from 17.4 to 30 percent of GDP over the same period, leaving the central government with a balanced budget for 2006. The government has planned conservatively with respect to oil prices: for example, for 2007, the budget planned for oil at $29 per barrel, compared to an average price of $65.20 dollars per barrel for Venezuelan crude last year. The government has typically exceeded planned spending as oil prices come in higher than the budgeted price, so it is possible that spending would be reduced if oil prices decline.


http://www.rethinkvenezuela.com/downloads/cepr%20report.htm

Audio (.wav) http://www.abdn.ac.uk/~nhi708/classify/animalia/uniramia/pterygota/cricket.wav

:)

Who do YOU listen to?

And you didn't answer my question. Who didn't get what they were promised?

http://news.bbc.co.uk/2/hi/business/1925514.stm


Then after the boom has ended... i.e. now... You'll get the same thing again... just like before. As I said originally, before people started defending Hugo Chavez even though I said nothing about him originally, people will take credit for this boom when in fact it is due solely to oil prices worldwide.

made adjustments for the dip, including raising the minimum wage. While our government was telling us to fuck off and throwing millions at Wall Street, might I add.

The Ven government can't control the price of oil, clearly. But they can deploy the profits of their oil to benefit the people for a change and they can work to diversify their economy and work towards independence from the vultures at the IMF and the World Bank. They are doing all three and pretty successfully, too.

As oil prices continue to slide, so will it. Venezuela has nationalized numerous formerly corporate interests in the past three years as well as raise their minimum wage. This is their bail out. The only difference between ours and theirs is that they took total control of these industries while we only took incidental control by means of bailing out Wall St.

Likewise, you state many vague things in your second paragraph and no comparison to other nations or even a mean by which the world has functioned, so saying things like "pretty successfully", "diversify", and "work to" are meaningless phrases used in replacement for actual numbers and facts. If you have specifics, I will argue them. But I won't deal in generalizations.

And, even though oil is over $70 a barrel, why is their economy shrinking? Not stabilizing mind you, but shrinking?

Was Venezuela investing in oil processing capacity? If so, would that be an issue?

Also, how does the situation compare with other nations at this time of global economic challenges?

Surely we would want to take nations of similar economic capacity (i.e. an oil nation). To compare the US for instance, would be faulty as we had a lot of problems (in credit and the housing markets, auto industry, etc.) that they do not and did not have. Likewise, to compare say Japan to them would also be faulty as Japan would have other issues that Venezuela would not (as well as the opposite).

The difference between their bailout and ours is that ours will not benefit the American people. Theirs was planned to benefit the populace by putting money in their pockets as well as by redirecting profits that formerly went to multinationals' CEOs to their national kitty via nationalizations.

That's pretty different.

The Chavez government started working on diversification almost immediately on taking office. It's slow work because the country was in such a deep ditch. But Chavez has been very active in soliciting and in gaining trade with countries all around the world but especially in developing regional independence from the IMF and the World Bank. That's why there are hit pieces on him in the media more or less constantly. The real revolution he's leading is in Latin American financing.

Oil may continue to slide or it may hold or go up. Venezuela will have to deal with that in the short term. In the longer term, their efforts to grow other sectors will come to fruition. Agriculture, for example, was in the toilet when this government came in. But they have cross traded in Asia for technology and are working at land reform in order to pull that sector out of the red.

And aside from the efforts of the government to trade, they are investing heavily in education. They really seem to be taking the long view and have gone from working toward basic literacy to facilitating higher ed.

Another move that might serve them well is the nationalization of their ports. The ports were notoriously where the state lost revenue to all kinds of corruption, smugglers of every kind including drug runners. All nationalizations are not equal and that one is going to put money in the people's pocket plus it will keep the state more secure because the ports can't be bought any more.

The horrible mess that Obama faced when he came into office is nothing to the mess the Chavez government had to face.

This is very off topic.

In short, I doubt that the exact things that they did would help us because our economy is more diverse than theirs. In general it may have been a good idea. Maybe not. We'll never know.

It must be said however, that their economy was not strapped by two wars, the Bush administration, and an economy near the end of it's cycle.


Would it be good to raise minimum wage, of course. Would privatizing oil help us? Probably not because our economy is much larger and much more sluggish than simply selling oil would provide for. We do need to invest in green energy as some have suggested.

Put money in the pockets of consumers and not in tax evading CEOs and jump start industries that will fill the federal coffers.

And their economy is not strapped by two wars, Bush or our economy. Their economy is strapped by hundreds of years of strip mining by American financial interests, just as their infrastructure is. We aren't in the position of teaching our people to read so they can add to our economy. We aren't in the position of fending off the United States as we try to set about salvaging what we can from this meltdown. Venezuela is.

It is only small beans compared to the rest.

What we had was unsustainable growth in the housing market. An auto industry which suffered from both an image problem and rampant mismanagement (over-production of SUV's primarily). What I like to call Laissez-fucked economics in which we let people cook the books, invest unwisely, provide investments unwisely, and function on a growthside industrial-economic model. (They spent money as if the market would keep growing forever.) And a thousand more things including unwise credit practices, etc.

Therefore, to compare Venezuela's problems and our problems and try to come to some sort of mutual solution that the two can share, is very unlikely to occur as neither had the same problems as the other. Solutions for each of their individualized problems are needed.

It was unhampered capitalism in the most anti-social sense of the word.

Fortunately for Venezuela, their government has learned better. Unfortunately for us, ours has not. Our books are still being cooked and with gusto. Venezuela doesn't have that luxury because they are always under a microscope. To there benefit.

Please back-up your assertion.


(Wilms mumbling..."next it'll be Chavista Death Panels". :eyes: )

be it a current or former resident will post soon.

:hi:

and universities because they can't teach anything not located on their property.

I didn't realize that was a difficult concept, considering our Rethug population in the very least. My point is that one does not understand something solely because they lived there. In fact, it is more likely they don't because they have an emotional attachment to one outcome or another which distorts their objectivity.

as written.

Read the subject line of your post.

80% of the populace was living under the poverty line pre-Chavez. :)

What I said is that their nation has seen prosperity over the past six years or so because of increased oil prices, of which they didn't cause nor control. In the period before it and in the period presently, we begin to see hardships arise again.

You can say what you said and it would be true. But it isn't true that it's because of policies enacted by Chavez any more than saying that Eisenhower caused the housing boom in the 1950's and 60's. You could say he positively effected it by signing the Federal Highway Act, but it took outside forces, the baby boom and the war, to bring to fruition the boom. The Act alone wouldn't have done it.

because Venezuela was being raped by the oligarchy. And in this period, we won't see anything like the same kind of misery. Your comparison is faulty.

when oil prices rose.

upon the people of Venezuela have been cut out of the deal.

Oil may go up, down or nowhere. But the structure that was strip mining Venezuela is gone.

of Venezuela where before they were being exported to foreign oil companies under corrupt and illegal (under Venezuelan law) deals made in the 90's.

under previous administrations. Why was Venezuela's population so poor and under-educated? Isn't it because Chavez nationalized its resources and used the revenue from them for the benefit of all of the people, whereas before those benefits went to only about 20% of the population?

As for the recent dire predictions about inflation, it was far worse under previous administrations:

http://www.venezuelanalysis.com/news/3735

Inflation in 2008 has been significantly higher than last year (32.2% up from 22.5%), but the average under Chavez (20.9%) is still significantly lower than the previous two presidents (59.4% and 45.3% respectively).

The Chavez government has spent money from its oil revenues to build up other parts of the economy. Construction eg, has provided jobs and homes for Venezuelans. And since the population has grown and with people earning more money, the demand for food and other products has increased. Chavez has emphasized that Venezuela should manufacture its own goods so the manufacturing industry is growing.

Education spending too has increased:

Owing to increased social investment, government sectors have also shown some economic growth (4.5%), with teaching and education growing by 4.8% and health by 1.6%.

In just ten years, Chavez has turned around about 95 years of deprivation and fascism to the point where large segments of the population have benefited and, I will have to check this but I believe almost wiped out illiteracy.

Someone downthread suggested that to guage Venezuela's success you would have to compare it to other countries with similar conditions. True, but you only have to compare it now to what it was ten years ago to see that like him or not, Chavez' ideas HAVE been successful for the only people who matter, his own citizens. They have a long way to go to overcome the miserable, oppressive not-so-distant past, but imo, they are off to an excellent start and I for one, find it exciting to watch this happen in any country.

in the PRIVATE sector (not including oil), Venezuela can afford a bit of a cool-down. And that growth was accomplished while providing free education through college, free universal medical care and many other benefits to the people of Venezuela including to small businesses (the biggest provider of jobs in the U.S.--don't know about Venezuela).

Rotters economists have their heads up their collective corpo/fascist asses.

The economy shrank 2.4 percent in the second quarter as the government reduced spending to compensate for lower oil revenue while the nationalization of swathes of the economy dampened the private sector's appetite for investment. --Rotters

The only thing "dampened" in Venezuela is the weather. It rains a lot there. But, hey, the poor can now afford umbrellas...and houses! Booming economy. Huge majorities happy with the government. No recession--and no Great Depression, as we are suffering here because of the egregious looting of the fuckwads whom Rotters toadies to. Nope, Venezuela landed on its feet due to the excellent management of the economy by the Chavez government.

You know I don't doubt it, but you know many (DLC Interns) do.

Put up some ammo. I often do.

Thanks.

The Central Bank explained that the Gross Domestic Product in the second quarter plunged 2.4 percent and, together with a 0.5 percent growth in the first quarter, this represents a 1 percent decline in the first half of 2009

http://www.eluniversal.com/2009/08/20/en_eco_esp_venezuelan-economy-s_20A2640529.shtml

UPDATE 2-Venezuela economy shrinks for 1st time in 5 years
08.20.09, 05:50 PM EDT

http://www.forbes.com/feeds/afx/2009/08/20/afx6800545.html

These are from Aug. 2008 reflecting the previous quarters, so they do not include the recent numbers. But with growth like this over such a long period of time, the small % of decline will hardly affect the overall economy. And considering that the government has factored in the affect of oil prices, which they cannot control, I don't think there's much to worry about. As for the claims that there is no private investment, that appears to be false.

http://www.venezuelanalysis.com/news/3735

Venezuelan Economy Grows 7.1% in 19th Consecutive Quarter of Growth

Reflecting the increase in living standards and national production sovereignty, Venezuela’s gross domestic product (GDP) increased by 7.1% in the second quarter of 2008, relative to the same quarter in the previous year.

> snip

This year in particular the government has focused on achieving economic sovereignty, which involves producing and processing products in Venezuela, rather than importing them. Investment in construction grew by 13.5% and in machinery and equipment by 4.4%.

The economic growth was sustained as much in oil related activity as in non-oil related activity, with the latter’s growth at 7.8%.

> snip

The private manufacturing industry continued its pattern of expansion for the 19 consecutive quarters. This sector’s growth by 4.6% was fundamentally determined by growth in the manufacture of clothing (21%), paper (19.4%), non-metallic minerals (8.9%), wood products (8.1%), food, drinks and tobacco (7.1%), rubber and plastic manufacture (5.6%), printing and publishing (4.8%) and manufacture of chemical products and substances (1.4%).

The food industry continued to make significant progress in meeting the growth in demand, especially with the production of fats and oils (10.8%), bread products (10.1%), and the production, processing and preservation of meats and their derivatives (8.8%).

There are lots more numbers and some comparisons with other countries, including the US during the same period of time. If this country had invested in Main St. as Chavez has, rather than Wall St. there is no doubt it would have helped our failed economy.

Investment in social programs has helped their economy. Chavez states that now they must invest more in a 'cultural revolution' as he says,

“Fascism is defeated with consciousness and consciousness is achieved with culture and knowledge,

Hard to argue with that as we have seen here where ignorance and a lack of investment in culture over the past number of years, and a failed media where Fox, and rightwing radio spread talking points rather than real news, has resulted in the American people supporting such disasters as Bush's wars and the bankrupting of the country and now opposing their own interests regarding HCR.

If Venezuela is not undermined by the usual greedy suspects, I don't think we, who have so much to worry about right here, need worry about them.

I'd be moving today.

He would be a failure. And, bit by bit is failing today as the economy does shrink because of decreased revenues.

A strong government is not measured in good times but in bad times. It is only in bad times that the true durability of a government is tested. It was for Chavez in the 1990's, lest we forget, and he nearly failed. It is again, and the economy of Venezuela is again shrinking. Time will tell how far it will go and nothing that he as done in the past will change that, simply do to the fact that he does not and cannot control oil prices. Too many eggs in one basket?? Time will tell.

They've surfed this crisis very well and now oil prices are back up again.

You doomsayers have been proven wrong over and over and over again. It amazes me that you can continue with your dire predictions that never materialize. That must be exhausting.

I am not a doomsayer. I look at economic trends and see them for what they are. In good oil years Venezuela does good. In bad years for oil prices, they do bad. Venezuela is largely dependent on oil. This shouldn't be brain surgery to understand!

We just had the worst economic downturn since WWII and oil prices did not collapse. They can't. Venezuela's only problem with oil revenue will be when they run out.

Oh and yes of course the oil drives their economy. It has since the 60's. It did in the 90's when the IMF crowd was running the show and the economy tanked to near total failure. The difference now is that far more of the profits are going back into Venezuela, are directly benefiting the people, and that is what drives you nuts.

these states are likely going to continue doing well.

http://online.wsj.com/article/SB125106951994952269.html?mod=igoogle_wsj_gadgv1&

Oh well, why so bitter?

Message removed by moderator. Click here to review the message board rules.

about Venezuela. Just wanted to register the rec as it is likely to disappear. I am truly astonished at the negative attitude towards the people of Venezuela. I know it is a minority, most people wish them well and continued success, both in this country and around the world. I really would love to hear from those who silently express their opposition to Venezuela's success by unrec'ing any diary reporting on good news for those people. I cannot think of a reason in the world to want to return that country to what it was before Chavez.

I have a friend who is a citizen of Ven. and who at first opposed Chavez, fearful for his family's status as an upper middle class family. But, what won him over was love for his country which does not mean 'I've got mine and I don't want to share it'. He realized his country was in dire straits, his own people were suffering greatly and he decided to give Chavez a chance. He and his then girlfriend both voted for him in the second election. He is very happy and excited about Venezuela's future.

Eduardo Galeano Contemplates History's Paradoxes
by Susan Stamberg

August 24, 2009
At a Summit of the Americas last spring, Hugo Chavez, the frequently anti-American president of Venezuela, gave President Obama a copy of Open Veins of Latin America.

First published in 1971, the book presents author Eduardo Galeano's version of the history of "five centuries of the pillage of a continent."

Galeano's name may be unfamiliar to most Americans, but in South America, he's a legend — revered in some circles, reviled in others.

Now 68, the Uruguayan author spends most days at his favorite cafe in Montevideo, Uruguay, where fans phone to ask if he is there or when he's expected. Sometimes they leave letters and books for him to sign. Galeano says he was formed in this cafe and others like it:

"These were my universities. Here in cafes is where I learned the art of storytelling — great anonymous storytellers that taught me how to do it," he says. "I love these places where we may have time to lose time. It is a luxury in this world."

A left-wing intellectual, Galeano was arrested and forced out of Uruguay after the 1973 military coup. He spent 12 years in exile and was put on the Argentine military government's death list.

Now back in his homeland, Galeano has the luxury of time. He writes in his hometown cafe about themes that have preoccupied him for a lifetime.

"Always in all my books I'm trying to reveal or help to reveal the hidden greatness of the small, of the little, of the unknown — and the pettiness of the big," he says.

More:
http://www.npr.org/templates/story/story.php?storyId=112064007

http://vivirlatino.com.nyud.net:8090/wp-content/uploads/2009/05/eduardo-galeano-300x295.jpg http://3.bp.blogspot.com.nyud.net:8090/_czlqIyZ5oHo/SewOoOi8NcI/AAAAAAAAAOE/wPPoRhin6EE/s400/Open+Veins+of+Latin+America+by+Eduardo+Galeano+20+apr+2009.JPG