Oil Bonanza to Boost Venezuela's Economy for at Least 2 yrs
|Wednesday, October 06, 2004
Venezuela's battered economy will grow more than 12 percent this year, and at least 3 percent more in 2005, and it should maintain that tendency for an additional two years propelled by high international oil prices, according to the country's banking and trade sectors.
Consecomercio trade association president Jorge Botti, who is also the president of Venezuela's Central Bank, and the head of Spain's Grupo Santander, Michel Goguikian, both expressed agreement with this prognosis at an economic forum underway here.
The forum on economic perspectives for Venezuela, the world's fifth-leading producer of crude, was organized by the Venezuelan-Spanish Chamber of Commerce and the Andean Development Corporation (CAF), and is being attended by invited guests from Venezuela and abroad.
Botti said Consecomercio predicts that Venezuela's gross domestic product (GDP) will increase between 12 and 13 percent this year and betweenI3 and 5 percent in 2005.
Botti's statistics coincided with those offered by the president of Banco de Venezuela Grupo Santander, and both executives said the economy's improvement was due to high international oil prices.
The price of Venezuelan oil closed last week at $41.61, $1.75 higher than the previous week, and the National Economic Council predicted a net income of $33 billion for the state-run oil giant PDVSA this year.
Expectations that the oil bonanza will continue open "a window of opportunity for commercial businesses limited to between two and five years," Botti said, commenting on the situation's advantages and risks for a country like Venezuela, which is highly dependent on a single product, in this case oil.
"Let them take advantage of having broken the piñata and grab all the candy they can, but they shouldn't eat it all," Botti said.
He added that the envisioned economic bonanza will lead to "excessive government spending and the illusion of economic recovery," which, along with other factors, could degenerate into a "tendency to overvalue the currency," which would directly affect industries like manufacturing.
According to the Central Bank, Venezuela's economy grew at an annual rate of 13.6 percent during the second quarter ofU2004.
Data from the Central Bank indicate that the Venezuelan economy shrank 9.2 percent in 2003, and the GDP decreased 8.9 percent in 2002 due to political instability that included a short-lived coup and a 63-day-long strike against President Hugo Chavez that affected the country's vital petroleum industry.