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Venezuela Confirms Recession

Venezuela Confirms RecessionVenezuela Confirms Recession

Venezuela confirmed it had entered a recession while inflation remained the highest in the Americas, and President Nicolas Maduro’s government blamed political foes for the dismal data.

The Central Bank said gross domestic product (GDP) contracted in each of the first three quarters: 4.8 percent, 4.9 percent and 2.3 percent. Twelve-month inflation reached 63.6 percent in November, AFP reported.

Economists, banks and regional bodies have long forecast that the OPEC member would be the worst-performing major economy in the region this year. The central bank statement confirmed those views just before Maduro attend a news conference in which he was expected to announce economic changes.

Maduro, 52, won election last year to replace Hugo Chavez. He has blamed political opponents, who protested in the streets for four months this year, for damaging the oil-dependent economy.

“These actions against public order blocked the correct distribution of basic goods to the population, as well as the normal development of production of goods and services,” the central bank statement said. “This resulted in an inflationary spike and a fall in economic activity.”

Venezuela, whose last recession was from 2009-2010, may struggle to turn around its economy given the plunge in oil prices. Venezuelan crude has dropped to $48 per barrel, compared with $96 mid-year. Inflation in September was up 4.8 percent, October 5.0 percent and November 4.7 percent, compared with the same months of 2013. Venezuela had not published inflation data since August.

The bank said Venezuela’s balance of payments posted a surplus of $6.8 billion by the end of the third quarter, with a current account surplus of $899 million, and the capital account showing a deficit of $568 million.

Venezuelan exports, of which oil accounts for more than 90 percent, fell 14.2 percent to $19 billion in the third quarter, while imports were down slightly, by 1.4 percent, to $12.2 billion in the same period, the bank said.

 

Financialtribune.com