Caracas, June 3rd 2013 (Venezuelanalysis.com) – The Venezuelan Central Bank reported a 0.7% growth of GDP in the first quarter of 2013, a figure that has garnered mixed reactions.
On one hand, the figure marks the country’s tenth consecutive quarter of expansion since the end of 2010, a record that European economies, which shrunk by a combined 0.2% this quarter, have failed to maintain during the recent economic recession.
However, the figure also marks a decrease from a 5.9% growth rate reported during the same period last year, and falls short of the Finance Minister Nelson Merentes’ target rate of 5 to 6% growth for 2013, after a 5.6% growth in 2012. Coming at a time when inflation has approached 30% and reports of the scarcity of basic items have abounded, the news has confirmed the doubts of opposition critics.
“These outstanding graduates of the School of Hogwarts didn’t take into account that the growth of a little over 5% in the previous election year was a pure rush of public spending in an environment in which the supply of dollars, converted by these magicians of importing, was reduced,” columnist César Tinoco wrote sarcastically in the rightwing paper El Universal in a piece entitled “Tontos,” or “Idiots.”
In Venezuela, a country which imports a large quantity of its material goods, importers pay for their shipments with US dollars. They receive these dollars from the government at the official rate of 6.29 bolívares fuertes, the Venezuelan currency, for each dollar. According to much of the business sector, and as Tinoco claims, the government’s delay in exchanging dollars has forced owners to resort to the unprofitable black market rate of 25 bolívares fuertes per dollar, causing the current shortage of basic commodities, including milk and toilet paper.
The government, on the other hand, alleges that the employers themselves cause these shortages by hoarding goods to arouse discontent for political motives. As supporters often point out, shortages normally peak during election cycles, and there is never a lack of beer. In 2003, during a petroleum strike initiated by business owners with the goal of forcing late president Hugo Chávez to resign, National Guardsmen raided the bottling plants of Coca-Cola and Empresas Polar, the country’s largest brewery and food producer, to find water, soda, and beer, which they proceeded to distribute to the population.
“The commercial bourgeoisie is attempting a sort of economic warfare against the people,” President Nicolás Maduro has previously stated. “We’ve made invitations in good faith to the employers of the food sector, we’ve spoken with them, and some have reacted positively … Those that want to work, that’s great, let’s work. And let’s make sure that we’re respecting the law, and respecting the people.”
A Positive Sign, and a Plan to Move Forward
Despite a lower economic expansion than anticipated, the Bank’s report did allude to the “positive sign” of a .9% growth of the non-oil activity, which equaled the growth of the oil industry, the largest source of national income.
This aggregate increase included growths of 31% in financial institutions, 6% in communications and 3.4% in the producers of government services, along with reductions of 3.6% in the manufacturing industry and 1.2% in construction.
“In the behavior of non-oil activity, the reduced availability of imported and domestic products were important factors, along with the impact on the production grid caused by the lower construction of works, mainly public, which were affected by fewer hours worked and operational and financial problems,” the report said.
The report also noted a 1.8% increase in internal aggregate demand, associated with growths of 9.6% in gross fixed investment, 4.1% in government expenditure, and 3.2% in final private consumption.
Regarding the issues of moderate growth and inflation, the Central Bank indicated that it would continue working with the national executive to “deepen social inclusion and progressively diminish inflationary pressures, with the goal of improving the welfare of the Venezuelan population.”
And in relation to the current shortages, Merentes assured reporters on Thursday, before the report was released, that officials were close to completing allocations for 70% of the companies with whom they hope to distribute products.
These developments, suggested Central Bank president Betancourt, are a sign of improvements to come, even though first-quarter indications were “not as we wanted them to be.”
"We recognize it: we have some disturbances in the economy. But we're acting in a systematic manner to resolve them, and the truth is that we're doing it," she said.