Venezuelan GDP recovery is unstoppable due to increase of oil prices

Caracas, Aug 21. ABN.- The oil incomes that Venezuela is going to register in the third and fourth trimesters of this year will make unstoppable the recovery of the Gross Domestic Product (GDP), because the positive behavior of the Venezuelan oil, which is near to 70 dollars per barrel, will mark the tendency of the national economy.

That was the estimation made by Fernando Travieso, oil analyst, making reference to the 1% contraction suffered by the GDP in the first semester of 2009, which, in his opinion, it is a consequence of the drop on oil prices and the rest of the commodities at the international market, which was in turn caused by the global financial crisis.

“The fell of oil prices in January is felt in the second trimester, after more or less 3 or 4 months; for that reason, the current recovery will be felt in the last part of the year – third or fourth trimester,” he reiterated.

Furthermore, he made clear that Venezuela is far away from entering into a stagflation period, because to be in such state the GDP would have to go through several consecutive trimesters with high inflationary levels. Currently, the country barely presents a fell of -2.4% from March to June, after growing 22 consecutive trimesters; and the accumulated inflation this year is 13.1%, that is 4 points lower than the same period of the last year.

“There is stagflation in a country when the economic index is falling by 5% and an inflation of 80%,” he said as an example in an interview offered to the Bolivarian News Agency.

Moreover, analyzing the growth of the non oil activities, such as construction (4.25%) and electric power and water (4.1%), Travieso reiterated that Venezuelan economy is not suffering a stagflation, because those numbers indicate that there are still sectors showing economic strength in the country.

Regarding the drop of -8.5% in the manufacture sector and other activities that caused the negative trimester, Travieso considered that the currency exchange control is not enough to prevent importations suffocate internal production. He suggested that the Government should carry out measures to increase domestic manufacture to progress on the substitution of foreign purchases.


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