Venezuelan Unemployment at New Low, GDP Continues Strong

Caracas, February 28, 2007 (venezuelanalysis.com)— Venezuela’s January unemployment rate dropped to its lowest level, 11.1%, in over eight years, according to the country’s National Statistics Institute. Also, GDP growth for the 4th quarter of 2006 was higher than expected, at 11.8%.

The January 2007 unemployment rate, explained Statistics Institute President Elias Eljuri, was 5.5 percentage points lower than when Chavez came into office in 1999 and 1.8 points lower than in 2006.

According to Eljuri, this rate is doubly positive because it also reflects a higher than usual rate of formal employment, which increased by 2.5 points, from 54.0% to 56.5%. This means, though, that 43.5% of the workforce is still employed in the informal labor market.

Last week the Venezuelan Central Bank released the country’s economic growth data, which showed that the Venezuelan economy was still growing steadily, despite lower oil prices in the second half of 2006. At 11.8% GDP growth for the 4th quarter of 2006, this was the 13th consecutive quarter of growth since the 4th quarter of 2003. Venezuela’s economy has grown by over 10% every year since 2004.

The total growth for all of 2006 was 10.3%, which is about what had been predicted at the end of the year. Altogether Venezuela’s economy has grown by 22% since Chavez came into office in 1999. The years 2002 and 2003 the economy shrunk significantly due to the coup attempt and the shutdown of the country’s all-important oil industry.

The sectors that experienced the greatest growth in all of 2006 were financial institutions (39.2%), construction (32.1%), communications (23.2%), and commerce (19.9%). Government services grew far less, at only 3.8%. The only sector to shrink slightly during 2006 was the oil sector, which declined by 1.9%, presumably due to the lower price of oil relative to 2005.