Venezuelan GDP numbers terrible, even if you don’t believe them

May 26, 2010

The Venezuelan economy remained in the same “solid” territory that President Chavez refers to, but this is solid negative, not solid positive, as GDP shrank -5.8% in the first quarter 2010. Of course, you have to believe Government statistics. I particularly find the number suspect, it is identical with 4Q09, when we did not have electricity rationing, lower CADIVI outflows and a devaluation.

But even if you believe it, it is absolutely horrible, at a time of world and particularly regional economies recovering strongly. The oil sector shrank by -5% and the non-oil sector by -4.9%. (Yes these two are incoherent, Quico has more on that) The private sector shrank by 6%, while the public sector contracted by 2.8%. Investment was down 27.9% (way to go Hugo!), exports declined by 8.1%. By sectors only Communications (+9.7%) and Government Services (up 2.8%) were positive. Manufacturing was down 9.9%.

There you have it, of course, in Chavez La La land, the Agencia Bolivariana de Noticias, the headline is different:

“Social GDP up 2.8%”, a reference to the growth in community, social and personal services. As former Chavez hand Luis Miquilena would say: “How do you eat that?”

In any case, Venezuela is mired in stagflation, devil’s excrement, shortages and the systematic destruction of the country’s economy by XXIst. Century Socialism.The current foreign exchange crisis will only amplify the problem. Who will be blamed for all of this?

And reserves down to US$ 26.35 billion with two weeks of no alternative market.

Not pretty…

40 Responses to “Venezuelan GDP numbers terrible, even if you don’t believe them”

  1. […] a country where critics make sport of questioning official statistics, it was a pleasure to have credible numbers provided by what appeared to be […]

  2. Alexander Guerrero Says:

    There are reports –unofficial- from insiders at VCentral Bank that the real GDP “numbers” considered at VCB Board was between 7 and 6% negative growth.
    Indeed my own -adjusted by two factors, devaluation and electrical system collapse- – estimations at the beginning of 2010, following the powerful impact of a hiperdevaluation of 100%, “forced” contraction in government expending and the collapse of public electrical system (75% of all electricity supply in our country) showed to be even larger (-12% in terms of real GDP). Consider that all of it signals and occurs in the middle of the twin’s deficits, a balance of payment crisis and fiscal crises. Therefore, the economy measured in terms of GDP will contract much more than expected.
    On top of that you have to consider that private sector (de)capitalization process was running very fast during 2009, and in a great respect, that process was the consequence of many years of government strong and non-sense intervention, not only markets, but legal restrictions in labour laws, tax regulations, and other “socialists” regulations. Private sector disinvestment was caused not only by the more publicity factors like currency overvaluation and government capturing of a large parts of imports, but due to a big deal of restrictions already incorporated in many laws which run the economy just from the approval of the new constitution in the year 2000.
    A look at the structure of trade -Venezuelan imports from 2003- will discover the degree of (de)capitalization and disinvestment of private sector. We observe that intermediate, capital, and raw materials imports were growing (at smaller rates of GDP) and even decreasing. Data on imports of consumer and final goods were growing rates larger of GDP growth in these years.
    In the last two years 2009 and 2010, we are witness of a government expropriation razzia of private business and today this “policy” is reaching one of the most important and larger private sector business economics –POLAR.
    Taking all of those factors into account, and I modeled them, a negative growth of 5% might look unbelievable. I continue to forecast even a bleaker outlook for the remaining 2010 year, in spite of NA elections, which take place in September 26th.

  3. Speed Gibson Says:

    daniel asks “when will this idiot get out of here”

    the answer is when you people grow some balls and do something about it instead of waiting for The Messiah Obama to do it for you…..

    you people need your Bunker Hill moment…..get one with it already

  4. Kevin Says:


    Bloomberg has a headline today, “Venezuela to Ban Brokerages From Bolivar Debt Sales.” Also according to information on Bloomberg (not a story just listed as information on bond auctions) there have been several apparently failed bond auctions in the last few days.

    I’m wondering if the GBV is losing the ability to do debt financing. If they lose that, they will have to resort directly to the printing press. THAT is the final step to hyperinflation.

  5. Hey,
    Guess who is going to create the backbone of the new foreign exchange system: El Imperio!!! You guys are just too funny…ía/Bloomberg-hará-plataforma-para-sistema-de-bandas

  6. LD Says:

    The BCV speaks of preliminary data. Guess what? I’m convinced that the action against the permuta-market is a smoke screen too. It’s always the same, bad data get released “tarde, mal y nunca” . Looks a lot like Goebbels…
    “De acuerdo con estimaciones preliminares, el Producto Interno Bruto (PIB) a precios constantes experimentó en el primer trimestre de 2010 una disminución de 5,8%, respecto a similar período del año anterior.”

  7. Mitzy Says:

    Interesting Washington Post’s article on Venezuelan economics and HC self-destruction:

    Less than pretty options at the end…

  8. Fred Says:

    O.T. I can’t recall how many times I’ve seen/heard that Venezuela is preparing/prepared to counteract an invasion from the Empire …..

    I just saw this and couldn’t help laughing:

    Grupo armado irrumpió en Fuerte Tiuna para llevarse 465 mil Bs.F.

  9. moctavio Says:

    I agree Carlos, Sivensa reported a drop by volume of all of its products between 20% and 35% in 1Q10 due to low demand and rationing, this is a very real company that did not shut down completely nor did it send workers home.

  10. Carlos Says:

    It is terrible but it is not true.. Q4/2009 was a “normal” quarter.. During Q4 all CVG’s subsidiaries were insufficiently producing steel, alum, electricity, ..but they were working.. In this Q1, most of them were actually shut down. Almost no production in basic materials. Pdvsa also had many partial cuts and glitches reducing production well below Q4.. Nationalized cement factories, Exito supermarkets, had double digits cuts.. Even my smallcap billed 20% less than Q12009 or Q42009.. I am absolutely sure the figures forGDP contraction are near or slightly above 10%.

  11. Andres F Says:

    Armagh Man, I agree I don’t know why they bother

  12. Miguel Octavio Says:

    No, a Casa de Bolsa needs approval by the Comision Nacional de Valores and needs to buy a Seat in the Exchange

  13. A_Antonio Says:

    MO, If you are worried about the authorities, I hope you have in place a B plan. Take care yourself. You have my empathy.

  14. JFE Says:

    I have one question:
    the 5.8% contraction for the first quarter is in relation to the same quarter in the previous year, or in relation to the end of the last quarter?.

    Because if it is the last option then we are looking at a mindboggling 20+% accumulated contraction for the whole year.

  15. Zax Says:

    they’re claiming that it’s the “capitalist economy” that’s sinking…

  16. Armagh Man Says:

    Now here’s the thing; as Thugo believes sincerely in the North Korean-type or Zimbabwean-type economic model so when did GDP, GNP or any economic indicators that ‘sane’ responsible countries take for granted become important in the defunct economies? You see these indicators are only of use to those who really have no control over them – for Thugo and his cohorts it is very clear by now that these economic indicators really mean ‘nada’. What is important is that there is enough in the kitty to keep some semblance of control and keep the graft going. If Thugo’s Economic Team (oxymoron in there somewhere) really wants to, they can simply stop issuing this data. As a matter of fact I really don’t understand why they even bother to do so now!

  17. Franklin Carvajal Says:

    Fiscalía ordenó allanamiento a las casas de bolsa Cedel y Kairos

    Cinco directivos de las instituciones financieras Grupo Maycom, Positiva, Venevalores, y Bencorp, están privados de libertad, mientras que uno de Ban Valor está imputado
    26 de mayo 2010 | 12:58 pm –

    Compartir / Favoritos Aumenta letra Restaurar letra Disminuir Letra Resaltar Texto Quitar Resaltado Generar PDF Enviar Articulo Imprimir Articulo


    1 comentario

    * Actualmente 1.50/5
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    Resultados: 1.5/5 (2 votos emitidos)

    [Fiscalía ordenó allanamiento a las casas de bolsa Cedel y Kairos]
    Fachada del Ministerio Público | Nelson Castro

    El Ministerio Público coordinó y supervisó el allanamiento de Cedel Casa de Bolsa y de Kairos Sociedad de Corretaje de Valores, en la continuidad de la investigación iniciada por la denuncia respecto a presuntas irregularidades cometidas por operadoras bursátiles.

    El MP informó que el procedimiento fue solicitado por los fiscales nacionales 20°, 23°, 61° y 74°, Daniel Guédez, Gabriela Soler, Samuel Acuña y César Millán, respectivamente, y acordado por el Tribunal 16° de Control del Área Metropolitana de Caracas.

    En ese sentido, con el apoyo del Servicio Bolivariano de Inteligencia Nacional (Sebin), se allanó la sede de la referida casa de bolsa, situada en el edificio El Samán, piso 1, en la avenida Venezuela en El Rosal, Caracas.

    Asimismo, fue allanada la sociedad Kairos, ubicada en el piso 15 del edificio Centro Letonia, en la avenida Eugenio Mendoza de La Castellana.

    La investigación sobre presuntas irregularidades se inició el pasado 14 de mayo, por la denuncia de representantes de la Comisión Nacional de Valores.

    Ese día fueron allanadas cuatro oficinas que fungían como casas de cambio clandestinas. Posteriormente, el mismo procedimiento se aplicó a la Sociedad de Corretaje de Valores Heptagon, la Casa de Bolsa Finalca, Ban Valor, Positiva Sociedad de Corretaje de Títulos de Valores y Premier.

    Después, las visitas domiciliarias se realizaron en Equitas Casa de Bolsa, Bestinvest Casa de Bolsa, Venevalores Sociedad de Corretaje de Valores C.A, Italbursátil, BBO Casa de Bolsa y Bencorp. Así como, en
    Fidevalores y Fortis, ambas sociedades de corretaje, además de Econoinvest.

    Por estos casos, están privados de libertad Jaime Rentería Primera, del Grupo Mycom y Bancas y Finanzas; Pedro Ramón Castillo Torcat, director general de Positiva Sociedad de Corretaje de Títulos de Valores C.A; Marco Siervo y Eduardo Sacco, presidente y director de Venevalores Sociedad de Corretaje de Valores C.A, respectivamente; además el director de Bencorp Casa de Bolsa, Rodolfo Reyes.

    Adicionalmente, fue imputado José Ignacio Rivero, director general de Ban Valor Casa de Bolsa C.A, a quien el tribunal le otorgó medida cautelar de presentación de tres fiadores.

    Actualmente, se espera por la presentación de cuatro directivos de Econoinvest ante el respectivo tribunal de control.

  18. Franklin Carvajal Says:

    Hey, are any of these casa de bolsa not registered with the government? That is, any of them belonging to the 60 or so “well established” casa de bolsa?

  19. Franklin Carvajal Says:

    I see, OK, no problem. I can find my information (or anyone else’s for that matter) on the internet with a few key strokes 🙂

    Here is the link:

  20. Miguel Octavio Says:

    Franklin: I will erase that message it has too much private information, all I wanted was the link for El Nacional story, because it seemed so incredible ignorant to say that, I wanted to read it. I did not comment on it because it may get me in trouble with the authorities.

  21. Juan Carlos Says:

    Is that true that Bencorp, Venevalores, Econoinvest, Fidevalores, Innova, BBO, Strategos y Valores Financieros might be shut down by CNV??? One thing is to take control of them but to close them down, is far too stupid…. It smells like a government’s new scapegoat milestone.

  22. […] as if things didn’t look bad enough, a number of analysts (such as this one) are beginning to suspect that, to put it politely, the central bank figures may understate the […]

  23. island canuck Says:

    WTI recovered today to US$71.47, an increase of 6.28% over yesterday.

    That should make his nibs sleep easier.

  24. A_Antonio Says:

    For some of our grandchildren will be objective to rebuild a country.

    I am afraid we will see how a country can be degenerated to more than dust and beyond.

  25. moctavio Says:

    Yikes!!! I can’t believe what she said.

  26. A_Antonio Says:

    I agree with Nicolaas, Chavez will maintain the power for decades to come. I hope to be wrong.

    Oil is a continuous drop that feed revolution, the degradation of a country with less resources like Cuba, can be ruined for decades, this with a little help from old Soviet Union and Venezuela.

    In the future, after Chavez, the country will needs decades to get recuperated.

    That’s why I say this century is off for any kind of human or economists development.

  27. NicaCat56 Says:

    Here’s the link to the El Nacional page:

  28. moctavio Says:

    Carvajal; Do you have a link?

  29. island canuck Says:

    “Slowly more and more sites are being “blocked” by CANTV”

    There are many sites now blocked however it’s an easy problem to get around.

    Just do a Google search for anonymous surfing & you will find lots of free proxies.

  30. ECG Says:

    Off topic.

    Slowly more and more sites are being “blocked” by CANTV. Disturbing.

    Good luck, everybody.

  31. From El Nacional:

    “…También afirmó que lo que se ha “descubierto” hastalos momentos, en el marco de las investigaciones, ha sido el hecho de “negociar”con los títulos valores.

    “No pueden subrogarse esa atribución, la cual correspondeexclusivamente al Estado, a través del Banco Central de Venezuela (BCV)”,alegó. Ortega Díaz señaló que la anterior Ley de Ilícitos Cambiarios “dejaba una puerta abierta” para que las casas de bolsa pudiesen negociar “dólares conla fachada de los títulos valores”.

    Señaló que se trataba de un “mercado especulativo” y que secae en el delito de “Comercialización de Ilícitos de Divisas”, cuando se comercializa por un monto mayor a los 20 mil dólares.

    Recordemos que esta serie de procedimientos comenzaron el 12de mayo, a raíz de una denuncia presentada por el presidente de la Comisión Nacionalde Valores (CNV), Tomás Sánchez.

    OK, this is crazy and confusing to say the least, are they talking here about a Casa de Bolsa that was not registered? If not, everything they are talking about here has been happening for a long time. So, what is the problem now? I can understand if you are not permitted to work with bonds or if you are laundering money or if you are not registered officially or if you just are buying and selling dollars straight without the mediation of bonds, but what they said is what most casa de bolsas have been doing the whole time since I can remember the swap bonds were created.

  32. Daniel Says:

    I was wondering, at the rate chavez is going.. citgo will be broke, seems to me all of the money venezuela has is going to cuba/socialist junk/ half finished projects.. businesses that they dont know how to run.. how long will chavez hold power? all that money going to cuba im sure means that half of the money sent to cuba is really sent to Canada or Switzerland, where chavez has a nice big bank account for himself..

    when will this idiot get out of here.

  33. colon Says:

    Who will be blamed for all of this?

    All of us, but mostly our offspring to pay for it…..Unless we unite there is little hope. Could there be an opportunity to combine NINIs with moderate opo (mesa de unidad) and ex-chavistas like the ones in De Frente Con Venezuela??

    Most people will want to replace chavismo with:
    ” la creación de una nación próspera y justa, a través de la educación, el desarrollo del conocimiento científico y tecnológico y la utilización del petróleo como palanca del crecimiento agroproductivo e industrial en sus máximos niveles de perfeccionamiento. ” but the Devil’s in the details of the full document from March (Declaración política. De frente con Venezuela)

    Disclaimer. Have nothing to do with either group.

  34. A_Antonio Says:

    As “El Universal” newspaper confirm yesterday, by The BCV (Venezuelan Central Bank) the real PIB (GPD) was 5,8 % negative, for the first quarter.

    Like I say in past comments, this Regime is changing the statistics to paint the reality.

    Is like the INE, National Institute of Statistics; that says the unemployment is around 8 %. The real percentage is near 60 %, because it counts not formal employment, like street vendors as formal employment, and also count all people that receiving any money from “missions”.

    Well, begins the real denying of reality.

  35. LD Says:

    Who will be blamed for all of this?
    Here the first one:
    “A juicio del presidente del Instituto Nacional de Estadísticas (INE), Elías Eljuri, no se puede descartar que la forma como se ha “especulado” con el dólar permuta haya influido en la disminución de 5,8% del Producto Interno Bruto ”
    Nice screenshot from prensa lat, ehh, ABN 😉

  36. captainccs Says:

    Reminds me of the movie: “Honey, I shrank the kids!”

  37. They had almost no USD income.

  38. I think it is going to be a 20 or 30 year battle for Venezuela. The reason I think that is your oil wealth.

    In Zimbabwe they wiped out the economy quite quickly with extreme hyperinflation of trillions of % per annum. No had almost no USD income.

    Because you have oil, the struggle is going to be very long.

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