Thursday, November 17, 2005

The boom continues 

The Venezuelan Central Bank today released Venezuela's economic numbers for the third quarter (July - September). Growth was 9.8% in the Third Quarter and is now 9.1% on the year (it was 7.8% in the first quarter and 11.1% in the second quarter). Please keep in mind, this is coming on the heals of the over 17% growth in 2004.

Now given what good news this is you can count on the opposition to immediately start trying to spin it. The usual lies on the economy are 1) "its all from the government", 2) "its all from the high oil prices", or 3) "the government is growing but the private sector is going down the tubes." But just like their non-sense about poverty going up under Chavez (it has actually gone down) and there non-sense about PDVSA going down the tubes (its actually doing quite well thank you very much) these attempts at spin are easily debunked by just looking at some of the numbers.

For starters the private sector grew 11.1% while the public sector grew "only" 5.4%. So wait, the private sector is growing more than twice as fast as the public sector! Well, thats half the opposition spin out the door right there.

Then we get these numbers: the NON-petroleum sector of the economy grew 10.4% while the petroleum sector grew by "only" 4.2%. So the non-oil sector grew more than twice as fast as the oil sector - the complete opposite of what most would probably think. So there goes the rest of the opposition spin out the window.

Giving a further break down of the numbers the Central Bank mentioned that manufacturing grew 9.3%, the service and commerce sector grew 18.1%, construction grew 18.4% and government services grew 7.3%. Note again all segments where the private sector dominates grew faster than government dominated sectors.

Ok, after being smacked in the head by some cold hard numbers the opposition spinmeisters will probably fall back to a last ditch defense - "yes the economy is growing fast but it is just because of all the government spending on populist programs".

Well, not really. Here are some more cold hard numbers. According to the Central Bank this growth was spurred by a 16.3% growth in agregate demand. Making up that increase in demand were an 15.1% growth in PRIVATE consumption, an 8.2% growth in government consumption, and a whopping 32.4% increase in capital formation (investment). So not only do we see that private demand is going up almost twice as much as government demand but the growth in investment is truly breathtaking!!!

So to just summarize the facts:

The Venezuelan economy is booming.

The private sector is booming and growing much faster than the public sector.

The non-oil sector is growing much faster than the oil sector.

Private spending is growing much faster than government spending and investment is going through the roof.

A couple of years ago when with their coups and strikes they were trashing the economy the main slogan of the opposition was "elecciones ya" - "elections now". With the numbers we just finished reviewing it should come as no surprise that the opposition now wants nothing to do with elections. The Venezuelan government has a 70% approval rating and is likely to easily prevail in any elections. Given the numbers from the Central Bank does that really come as any surprise?


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