Thursday, November 15, 2007


For all you insomniacs out there the Venezuelan Central Bank came out with its third quarter GDP statistics.

The third quarter grew 8.7% with respect to the third quarter of last year. The first quarter growth had been 8.6% and second quarter growth was 7.8% so this was the best quarter so far and brought the year to date average up to 8.4%. By Chinese standards this would be mediocre but by everyone elses standards it is quite good.

As usual, the non-oil sector led the way with growth of 9.7% while the petroleum sector shrank by 4.4%. That shrinkage in the petroleum sector roughly equals a drop of 132,000 barrels per day and would match the OPEC quota cuts that Venezuela had to abide by.

One difference in the numbers this time is that the the public sector outperformed the private sector 12.7% to 5.5%. The BCV attributes this to the nationalization of some big private companies like CANTV.

Now when we look at individual sectors we do see something interesting.

The fastest growth was in communications at 24.3% followed by commerce at 18.4% and then transportation at 15.5%. The lagging sectors were manufacturing at 7.7% and construction at 4%. Note that both manufacturing and contruction were both slower than growth in the economy as a whole. Clearly the increasing overvaluation of the Venezuelan economy is stunting manufacturing growth and keeping it below what it should be.

Interstingly the bank noted that agricultural production as been increasing at an average of 15% since 2005. So what shortages there are clearly result from increased demand not falling output.

In more general numbers imports were up 30.9% (is this good or bad?), consumption by consumers is up 20.4% (I guess this makes for happy voters), and fixed capital investment is up 17.3% which the government attributes to increased imports of machinery. However, for some time now we have seen investment go way up while production seems to be increasing but at a much slower rate.

Summing up, the numbers are good and any country would be happy with them. But it does appear that opportunities are being lost with imports crowding out domestic industry. For Venezuela to really thrive that needs to be reversed soon.


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