Tuesday, January 30, 2007

Blue skies 

Today I am posting some more slides from the recent VenAmCham presentation on the Venezuelan economy in 2007.

The first slide gives some predictions on oil prices by some top private financial analysists:

These predictions seem kind of high right now - they are all at least $10 above where the price is right now. Wonder what these people know that the rest of us don't? Anyways, if this turns out to be true, or is even close to being true, this will be quite nice for Venezuela.

Here are some actual macroeconomic predictions for 2007 and 2008.

They both show healthy, if unspectacular, growth. Note that they show non-oil growth faster than oil related growth. They also both show inflation under control at around 15%. While that is not great, neither is it something that is spinning out of control. They show the government running a surplus of 1.1% in 2007 and then going into a deficit in 2008.

Overall they predict a more difficult 2008 than 2007. Why? Simple. They predict oil prices at $55 in 2007 going down to $45 in 2008.

These predictions probably can't be expected to be more reliable than weather forecasts weeks in advance. Still they do show no one is expecting any significant problems.

In fact the next slide gives a summary of what these business economists expect:

They see economic activity continueing to expand significantly due to increased government spending.

They say this creates a risk of increased inflation. Nevertheless, given current oil prices and the existence of exchange controls they see little chance of a devaluation.

There are no important short term risks, but the sustainability of the fiscal expansion in the medium term is uncertain

There is nothing terribly contraversial in all this. Everyone knows the Venezuelan economy is doing well and is likely to keep doing well. Despite the doom and gloom and hystironics of some the business class sees the Venezuelan economy being stable and continueing to grow.

Oh, and as a final note. None of our opposition friends complaining about how there is no "real" growth in Venezuela dared to offer a guess on how much industrial production had grown since Chavez came to power. Well, here it is:

There you have it. Industrial production is now 24.5% HIGHER than when Chavez came to power. So much for the notion that Venezuela is witnessing nothing but a boom in oil prices and a boom in imports. Yes, those things are booming in Venezuela. But Venezuelans are themselves making a lot more than they did before Chavez came to office.


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