Venezuela’s Topsy-Turvy Economy

Courtesy of The Financial Times, an interesting article on Venezuela’s economy:

It has been pointed out before that Father Christmas and Hugo Chávez share a thing or two in common. Venezuela’s populist president may not have the fluffy white beard, but he has roughly the right build, and sometimes the jovial temperament. Most importantly, the oil-rich leader likes to give.

Of course, his detractors complain that his generosity is only felt by those who support him, and quite apart from the possibility that Chávez may give Christmas in Venezuela a miss this year (he may still be in Cuba for cancer-related medical treatment), they are now getting increasingly nervous that he may ruin their Christmas altogether.

Chávez’s opponents say that thanks to his nationalisation four years ago of Venezuela’s ports, which were previously in the hands of regional governments but are now partly run by Cubans, they have become increasingly inefficient and poorly managed.

As a result, ingredients for the typical Venezuelan Christmas dish, the hallaca, are sitting in containers in ports, as are Christmas trees and other imported goods, according to business representatives.

Having enjoyed two years of healthy economic growth since recovering from the effects of the global downturn, and with a boom in consumption this year spurred by a big jump in government spending ahead of presidential elections in October, Venezuela’s ports appear to be folding under the pressure. Container ships can be seen queuing offshore from Venezuela’s major ports, where cargoes can be stuck for as long as a month.

Part of the problem is that Venezuela’s economy is heavily reliant on its oil industry, which has tended to cause most other industries to wilt or simply not sprout at all. The OPEC country exports very little apart from oil, and imports just about everything else. Its ports, therefore, are of critical importance.

What is curious, though, is that while most imports are in disarray, the latest data from the US Energy Information Administration show a nine-fold surge in Venezuela’s imports from the US of petroleum products over the last year.

This is largely because of a series of stoppages at its refineries over the last year – again, critics attribute these problems to poor management and a lack of maintenance – in particular at its Amuay refinery, Venezuela’s largest, which is reportedly running at about half capacity since a gas explosion in August that killed more than 40 people.

In short, whatever the reasons, Venezuela is importing in spades the one thing it should really be exporting, while all other imports are only dribbling in. Just another day in the life of Venezuela’s topsy-turvy economy, then.

This entry was posted on Saturday, December 1st, 2012 at 5:27 am and is filed under Venezuela.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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