However, as president Chávez himself has said, macroeconomic figures are nothing if the average citizen does not benefit from what’s behind the numbers. The government has a long struggle ahead against widespread poverty and elevated inflation.

The Central Bank of Venezuela(BCV) reported that on the second quarter of 2004, the GNP grew 13.6% in relation to the same period in 2003.This result, averaged with the 34.8% growth in the first quarter of the year, yields a consistent 23.1% increase in the GNP for the first semester of 2004.

In the first six months of 2003, there was an 18.7% contraction in the economy, an aftereffect of the two month strike (December/2003-January/2004) that inflicted a severe blow on the oil industry and kept enterprises and stores shut down.

The evolution during the second quarter was basically due to activities not related to the oil business; their aggregated value grew by 15%, while oil activities increased 3.5%. From the official point of view, the private sector grew 16.1%, and the public sector 5.9%.

The economy seems to come back out of the deep pit it had fallen into in 2002-2003, with record contractions of 8.9% and 9.4%, respectively, amid the political turmoil that stirred the country.

An official announcement by the ministry of finance, indicated that since the atmosphere of conflict has been overcome after the August 15th referendum, the economy is expected to keep consolidating, and that “The unquestionable referendum results(...) are a reason for tranquility in the international market, and a clear and positive sign (for the financial community) of economic recovery in Venezuela.”

Continued growth throughout 2005

This year, private and official institutions have forecast economic growth between 10% and 12% in 2004, and between 3% and 5% in 2005. The minister of planning, Jorge Giordani assured that the 10% rise has almost been achieved and that the new goal is 12%.

The BCV pointed out that during this period there was 28.2% growth in the construction sector; 27.1% in the commercial sector, 27.1% in transportation and storage, 25.7% in the manufacturing industry, and 16.8% in communications.

The BCV report explained that the increase in these activities was generated by a 28.4% expansion of the aggregated internal demand. It also explained that a greater flexibility in foreign currency exchange control (which allowed more currency emission), along with the effects of more bank financing (a consequence of a drop in the lending interest rates), contributed to the expansion of the offer of goods and services, as well as of the aggregated internal demand.

According to the BCV, the rise in construction is due to a greater demand for works in the private as well as in the public sector.

The overall demand recovered 21.6%, as a result of an increase in private consumption (13.5%); gross fixed investments (42.7%), governmental expenses (6.5%), and exports (2.5%).

Furthermore, the BCV reported a 3,365 million U$ surplus in its trade balance current account for the second quarter of 2004. The surplus for the same period in 2003 was 3,218 million U$.
The increase was a consequence of a 32.9% rise in total exports, especially due to higher oil prices.

The BCV also reported a 37.3% increase in the non oil sectors; particularly in chemicals, iron and steel, plastics, aluminum, motor vehicles, and food and beverages.

Meanwhile, imports throughout the period were 3,928 million U$, an 88.7% increase in relation with the previous second quarter, “in accordance with the growth registered in the overall economic activity”

“Six of one and half a dozen of the other”
Another announcement by the BCV was that the capital and financial account of the world’s fifth largest oil exporter, Venezuela, had a 2,356 million U$ deficit. In 2003 it had a negative balance of 444 million.

This outcome is the product of deficits in the “Other investments and Portfolio Investments” categories, due to an increase in external assets like bills payable, deposits in the private and public non financial oil sectors, and net payments of the external commercial and financial public and private debt.

Yet other factors are the acquisition of bonds by the public and private financial sectors, “which represents a diminution of governmental debts worldwide; and governmental payments in general, such as restructured debt, and bonds of the public oil sector.”

The trade balance registered a 224 million U$ surplus in the second quarter of 2004. The 2003 surplus for this period was 2,661 million.

Published by Quantum No 29.

Maitane Larrañaga