Venezuela confirmed on Tuesday that it has entered recession, while annual inflation topped 63 percent, exacerbating the outlook for an economy already hit by crippling shortages and crashing oil prices.
The South American oil giant’s economy shrank 2.3 percent in the third quarter, after contracting 4.8 percent in the first quarter and 4.9 percent in the second, the central bank said, the first time it has released the figures for last year.
That is a new blow for Venezuelan President Nicolas Maduro, whose approval rating is at a low of 24 percent going into legislative elections next year that could force the followers of late socialist firebrand Hugo Chavez from power for the first time since 1999.
Photo: AFP
Maduro’s government has introduced mandatory price cuts and rent controls in a bid to rein in the increases, but has not managed to get the inflationary spiral under control.
Inflation — a figure that had not been released since August — came in at 4.7 percent for November and 63.6 percent for the year, making it among the highest in the world.
Venezuela is estimated to have the largest oil reserves in the world, but depends largely on imports for basic goods, including food and medicine.
Venezuelans can buy gasoline cheaper than bottled water, but struggle to find milk, flour, cooking oil, toilet paper, deodorant, shampoo and other products.
The shortages helped fuel violent protests against Maduro’s government from February to May last year, in which 43 people were killed.
The central bank said the protests “prevented the proper distribution of basic goods to the population and the normal production of goods and services.”
It blamed the demonstrations for an “economic reversal and a fall in economic activity.”
Price increases were the sharpest for housing, food and alcoholic beverages, and restaurants and hotels, according to the central bank.
It has not published the index that measures scarcity since March, when it found that 19 categories of key products were experiencing “serious supply problems.”
Falling crude prices have taken a massive extra toll on a country that gets 96 percent of its foreign currency from oil.
Venezuela’s oil export price has plunged from US$95 a barrel in September to about US$48, Maduro said.
He accused the US of waging an “oil war” to hurt major crude producers like Venezuela and Russia, both currently at odds with Washington.
A boom in shale oil in the US has upended the world market, causing crude prices to hit a string of five-year lows in recent weeks.
OPEC added to the downward momentum last month by ruling out a production cut — a decision pushed through by wealthy Gulf states over Venezuela’s furious opposition.
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