Venezuela to Resume Economic Growth and Reduce Inflation in 2011

This year, Venezuela will resume economic growth and reduce inflation, explained Minister of Planning and Finances Jorge Giordani on Monday. A reorientation of industries to provide an integral approach to social needs has also aided in the creation of a more dynamic economy in the country.

Giordani attributed the positive economic perspectives to the social policies implemented by the Venezuelan government and the private sector’s boost to the development of the non-oil economy and national production.

“The growth of the construction sector is important, because it will advance other sectors, including industrial factories, wood, cement, aluminium, etc.”, he added. Additionally, the minister highlighted that Venezuela’s economy will be dynamized through the housing program Gran Mision Vivienda Venezuela (Venezuela’s Great Mission Housing), through which 150,000 new homes will be built this year and about two million more will be completed by 2017.

“With this increase in construction, especially in the housing sector, an important social problem will be solved and additionally the economic apparatus will be activated. We will have growth, reduction of inflation rates and maintenance of unemployment rates way below other countries’ figures”, he remarked.

The high-level cabinet member explained that there are signs in almost every sector that the economic growth tendency will continue in the first trimester of 2011, according to figures by the Central Bank of Venezuela (BCV). The goal of 2-percent increase in the GDP estimated in the budget will be exceeded.

Additionally, Giordani highlighted that the country is entering into a new phase of inflation reduction. In the first trimester of 2011, according to figures of the National Consumer Price Index Rate (CPI), which adds 6 percent including the 1.4 percent registered in March, inflation reached its lowest figure in the last six months.

Giordani explained that the estimated inflation in the 2011 budget is between 23 to 25 percent. “We were prudent regarding the budget, expending resources and in estimations of inflation and growth”, he revealed.

LONG CYCLE GROWTH

Also discussing issues relating to the nation’s economic situation, Armando Leon, director of the Venezuelan Central Bank (BCV in Spanish), considers that the recovery of Venezuela’s economy could be in the framework of the new long growth cycle, involving all productive sectors.

“What trends show is that almost all sectors of the economy should grow this year”, he said and highlighted that this recovery began during the last trimester of 2010.

“Venezuela’s economy was affected by foreign and domestic factors. As these issues were overcome, the economy began recovering. The connection between the private and public sector has improved”, he explained.

Leon highlighted that the main signs of economic growth can be evidenced in the areas of telecommunications, food, chemical, petrochemicals, trade, manufacturing and services.

“There is an industry that has not stopped its growing impetus, which is essential because is the key for our human and social development: education and health services”, he underscored.

Likewise, Leon mentioned the progress achieved in the manufacturing sector due to an increase in the arrival of raw materials and consumables used for production.

In this regard, he made reference to the economic recovery and an increase in production in the country’s basic companies, particularly the iron and steel industries.

“These heavy metal industries have been improving significantly. They are placing their products at an important level and efficiency in foreign markets and supplying domestic market without any inconveniences. This creates a positive chain of production, because these companies are sending their products to the construction sector and other heavy industries that then use them for further economic activities”, he pointed out.

This year, other industries will join in the recovery of economic activities, such as publishing houses and printing presses.

“In the past years, these sectors have been very dynamic thanks to government policies, which have financially subsidized and aided everything related to editorials, publishing and the distribution of publications, helping them grow and expand nationwide. These industries have now become emerging economic sectors with substantial growth potential”, he stated.

Likewise, Leon said that the food and beverage industries have also registered a significant upturn as a consequence of new production plants built by the state and the joint work of public and private companies operating in the country.

In Leon’s opinion, strengthening the microindustry sector and family businesses has been essential in the past five years.

“They both generate a good number of jobs and are likely to include new technologies and new education methods. They are also high consumers of services, materials and consumables produced in the country. Therefore, they create positive productive economic chains”, he stressed.

In addition, the microindustry sector always ensures jobs for the highly skilled, trained and educated, and dynamizes social security, he commented.

PUBLIC INDUSTRY SUPPORT

Moreover, the director of the BCV highlighted the importance of goods and services from companies that have been nationalized over the past few years, which are now contributing to Venezuela’s growing economy.

“We have to prove that the new system of services and attention to citizens is better than we had before, which is evidenced through our improved socially oriented industries”, he emphasized.

In this regard, he mentioned the state-owned telephone company CANTV, re-nationalized by the Chavez administration in 2007, as an emblematic case proving that a public company can be efficient and improve its attention to citizens.

CANTV, which is the nation’s leading telephone and communications company, provides low-cost cellular and land-line services, as well as high-speed Internet to customers. The company has dramatically improved its outreach and attention to clients, as well as its services and coverage during the past three years. Previously, residents in remote areas or poorer communities had little or no access to telephone services, and no access to Internet at all. After nationalization, CANTV has made it a key policy to ensure that all Venezuelans are able to acquire telephone and Internet services, at affordable rates.

The state-owned company also regularly hosts and funds social events and projects that contribute to cultural and community development in the country, as part of the new vision of “socialist companies” in Venezuela.