By Andrew Cawthorne
CARACAS, Oct 8 (Reuters) - Venezuela's government said on Thursday the economy would probably shrink slightly in 2009, in the first contraction in six years for the South American oil-producer, which is suffering from lower crude revenues.
'We think that 2010 should be better,' said Finance Minister Ali Rodriguez, arguing that Venezuela was weathering the global downturn relatively well.
Venezuela's last calendar year of negative growth was in 2003, when the economy reeled from an oil workers' strike and political unrest. The economy grew 4.8 percent in 2008.
'With respect to 2009, we are not going to finish up growing, probably we will decrease close to or around zero,' Central Bank President Nelson Merentes told a news conference.
Venezuela's economy contracted 1 percent in the first half of this year, compared with the same period of 2008.
The government has seen spending restricted this year, on lower oil revenues, though higher global prices have eased the situation somewhat now.
After a successful $5 billion bond issue this week -- aimed at closing the gap between the black market and official rates for the bolivar currency -- the government promised more.
Rodriguez declined to be drawn into details beyond saying the next bond issue would probably come from state oil firm PDVSA.
Local media had been expecting Rodriguez and other officials to use the news conference to unveil long-flagged economic measures, aimed at spurring growth, curbing inflation and strengthening Venezuela's currency in the black market.
ECONOMIC MEASURES COMING IN 'CHAPTERS'
But the economic officials, appearing together at the news conference, surprised everyone by saying the measures would be unveiled gradually in coming days. 'This is going to be like chapters in a novel,' Planning Minister Jorge Giordani said.
Venezuelan President Hugo Chavez said in mid-September that his economic team had agreed on 40 new measures to increase the supply of dollars and 'reactivate' the local economy. The measures, he said then, would take effect on Oct. 1.
Analysts expect the measures to include wider availability of dollars at the official rate of 2.15 bolivars and extra government spending. They also anticipate more bond issues.
Officials have ruled out a devaluation, even though the dollar is trading at around 5.25 bolivars on the black market.
With an eye to legislative polls late next year, and aware of public discontent over galloping prices, the government is loathe to take politically awkward measures, analysts say.
'The government will remain reluctant to make any economic policy adjustments that could undermine Chavez's base of support, such as an official currency devaluation or an increase in gasoline prices,' EurasiaGroup analyst Patrick Esteruelas said in a report.
'It will instead continue to bank on a sustained recovery in oil prices and tap its stock of public liquid assets to muddle through and avoid making any politically costly decisions.'
Analyst Pavel Gomez, of business institute IESA, agreed.
'On the one hand, they are preparing for near-zero growth, or something negative, and on the other hand they are starting to inject money for electoral purposes. The objective now is political: the National Assembly elections,' he said.
'The goal is for the economy not to brake, or for the brake to be as politically cost-free as possible. That means protecting jobs. ... There is no long-term plan. The (coming measures) are simply palliatives to get to the elections.'
Despite the first half contraction, inflation remains stubbornly high, with prices rising 2.5 percent in September, the highest monthly level so far in 2009. That took the OPEC member's 12-month rate through September to 27.3 percent.
In line with Chavez's anti-capitalist line, his officials were at pains to explain that GDP figures were not the whole story in Venezuela, proudly showing U.N. figures of improving human development indicators in the nation of 28 million.
'If the economy is not aimed at happiness, at human beings, there's no point,' Giordani said, adding that the global situation was not a temporary crisis but a 'structural crisis ... for capitalism.'
(Additional reporting by all Caracas bureau reporters; Editing by Leslie Adler) Keywords: VENEZUELA ECONOMY/ (andrew.cawthorne@thomsonreuters.com; +58 212 277 2700; Reuters Messaging: andrew.cawthorne.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
CARACAS, Oct 8 (Reuters) - Venezuela's government said on Thursday the economy would probably shrink slightly in 2009, in the first contraction in six years for the South American oil-producer, which is suffering from lower crude revenues.
'We think that 2010 should be better,' said Finance Minister Ali Rodriguez, arguing that Venezuela was weathering the global downturn relatively well.
Venezuela's last calendar year of negative growth was in 2003, when the economy reeled from an oil workers' strike and political unrest. The economy grew 4.8 percent in 2008.
'With respect to 2009, we are not going to finish up growing, probably we will decrease close to or around zero,' Central Bank President Nelson Merentes told a news conference.
Venezuela's economy contracted 1 percent in the first half of this year, compared with the same period of 2008.
The government has seen spending restricted this year, on lower oil revenues, though higher global prices have eased the situation somewhat now.
After a successful $5 billion bond issue this week -- aimed at closing the gap between the black market and official rates for the bolivar currency -- the government promised more.
Rodriguez declined to be drawn into details beyond saying the next bond issue would probably come from state oil firm PDVSA.
Local media had been expecting Rodriguez and other officials to use the news conference to unveil long-flagged economic measures, aimed at spurring growth, curbing inflation and strengthening Venezuela's currency in the black market.
ECONOMIC MEASURES COMING IN 'CHAPTERS'
But the economic officials, appearing together at the news conference, surprised everyone by saying the measures would be unveiled gradually in coming days. 'This is going to be like chapters in a novel,' Planning Minister Jorge Giordani said.
Venezuelan President Hugo Chavez said in mid-September that his economic team had agreed on 40 new measures to increase the supply of dollars and 'reactivate' the local economy. The measures, he said then, would take effect on Oct. 1.
Analysts expect the measures to include wider availability of dollars at the official rate of 2.15 bolivars and extra government spending. They also anticipate more bond issues.
Officials have ruled out a devaluation, even though the dollar is trading at around 5.25 bolivars on the black market.
With an eye to legislative polls late next year, and aware of public discontent over galloping prices, the government is loathe to take politically awkward measures, analysts say.
'The government will remain reluctant to make any economic policy adjustments that could undermine Chavez's base of support, such as an official currency devaluation or an increase in gasoline prices,' EurasiaGroup analyst Patrick Esteruelas said in a report.
'It will instead continue to bank on a sustained recovery in oil prices and tap its stock of public liquid assets to muddle through and avoid making any politically costly decisions.'
Analyst Pavel Gomez, of business institute IESA, agreed.
'On the one hand, they are preparing for near-zero growth, or something negative, and on the other hand they are starting to inject money for electoral purposes. The objective now is political: the National Assembly elections,' he said.
'The goal is for the economy not to brake, or for the brake to be as politically cost-free as possible. That means protecting jobs. ... There is no long-term plan. The (coming measures) are simply palliatives to get to the elections.'
Despite the first half contraction, inflation remains stubbornly high, with prices rising 2.5 percent in September, the highest monthly level so far in 2009. That took the OPEC member's 12-month rate through September to 27.3 percent.
In line with Chavez's anti-capitalist line, his officials were at pains to explain that GDP figures were not the whole story in Venezuela, proudly showing U.N. figures of improving human development indicators in the nation of 28 million.
'If the economy is not aimed at happiness, at human beings, there's no point,' Giordani said, adding that the global situation was not a temporary crisis but a 'structural crisis ... for capitalism.'
(Additional reporting by all Caracas bureau reporters; Editing by Leslie Adler) Keywords: VENEZUELA ECONOMY/ (andrew.cawthorne@thomsonreuters.com; +58 212 277 2700; Reuters Messaging: andrew.cawthorne.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.