Yes, it is the economy silly, not the FARC that matters, but in the end it seems to be secondary to the Government’s plans, as those in charge appear not to have much of a clue as to what to do.
In the latest economic tidbits from the revolution:
1) Today was the first real day of the reconversion process and there was a lot of frustration everywhere. It is still hard to tell how well it went, as most people are still on vacation and many stores did not even open. I went by the supermarket where I shop and to my surprise it was closed as the systems were not ready yet. The ever optimistic Minister of Finance called it a success only to say right after it that 75% of ATM’s are working. Sounds low to me, but he has never been one to have ambitious goals (see below on inflation).
In terms of the banking system, most online statements seem to have the right balance, but charges seem to be in old Bolivars, so that people who had a few million old Bolivars, now have only ten thosuand or so, but were charged one thousand for Internet use or the like. They will eventually get it right.
The sad thing is that given current conditions, the whole process has been futile and it will do little to slow down inflation at a very high cost.
2) Inflation was bad in December. The CPI for the full year was 22.5% after December came in at the high end of expectations at 3.3%. Basically, between the new tax and too much money chasing too few goods, inflationary pressures are still around and growing. For the Minister of Finance Rodrigo Cabezas, the numbers are proof that he has been a total failure in the policies he implemented. Every time he announced a new policy he would say that it was not inflationary and he has said all along that high Government spending could coexist with low inflation. Now he calls the inflation for December “moderate” and says policies need to be changed. Jeez, I guess he never goes shopping and he certainly should read this blog for some pointers from a non-expert.
But if the 12 month number of 22.5%, twice the Government target of 12 % per year, as recently as July of this year, it was worse for Food and Beverages, which reached 4.7% for the month of December and 38.6% for the year. Items under control, many of which can’t be found in the shelves, were up 10.7%, while those without control went up 32.7% in 2007.
3) GDP numbers for 2007 are in and it is a case of good news and bad news. The good news is that thanks to high Government spending the economy grew by 8.3%, the bad news is that the oil GDP contracted by more than 5%, continuing a very worrisome trend. Moreover, imports for the year were close to US$ 45 billion, which is clearly unsustainable.
The Devil's Excrement 
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