Venezuelan Unemployment Drops 2 Percentage Points from Last Year

Caracas , October 20, 2006 (Venezuelanalysis.com)— The Venezuelan unemployment rate dropped two percentage points from 11.5% down to 9.5% between September 2005 and September 2006, the National Institute of Statistics said yesterday.

There are currently 1,175,308 people unemployed in Venezuela, 444,582 less than last year. Of the 444,582 newly employed people 318,355 are employed in the formal sector (official employment rather than street traders and such like who form part of the informal sector) out of which 191,483 are women.

In other economic news, Domingo Maza Zavala, the Director of the Central Bank of Venezuela (BCV), has said he expects the rate of inflation to reach between 14 and 15% by the end of this year. He said that increased public expenditure and increased liquidity, both consequences of the high international oil prices are the main causes of the high level of inflation, “demand keeps rising, particularly the demand for consumable good and food stuffs in particular,” he said.

Many economists have recently argued that the Venezuelan currency the Bolívar is overvalued, fixed as it is at Bs. 2,150 to the dollar. While not disagreeing with the fact the currency is overvalued, Maza Zavala doubted whether a devaluation would solve that fundamental problem.

“This overvaluation problem has always been with our economy. Evidently, there is an inflation rate that hasn’t been brought under control and while inflation persists, the value of the currency will be eroded in terms of internal spending power,” said Maza Zavala.

“If the currency is devalued this becomes more complicated, it will mean inflationary pressures will be unleashed, the cost of imports will be greater, likewise with production costs as imported economic inputs are required and as a consequence inflationary pressure would increase,” he added.

He finished by saying that the he expected inflation to be lower in 2007, at around 10-12%.

The BCV also announced yesterday that Venezuela’s foreign reserves reached $35.367 million last Thursday, an increase of $296 million from the previous week.