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Venezuelan economy shrinks nearly 3 percent

Venezuelan economy shrinks nearly 3 percent

Venezuela's economy shrank 2.9 percent this year as the key oil industry suffered a downturn, pulling the country into a recession for the first time since 2003.
A 6.1 percent decline in the key oil sector had the biggest impact in driving the recession, Central Bank president Nelson Merentes said as he released the figures in a year-end message published Wednesday in Venezuelan news media.
The oil industry, which dominates exports, has earned less due to lower prices and production cuts by the Organization of Petroleum Exporting Countries, of which Venezuela is a member.
Venezuela has not been in recession since 2003, when the economy fell 9.2 percent due to a failed 2002 coup against President Hugo Chavez and a subsequent opposition-led strike that paralyzed the oil industry. Since then, the country has enjoyed five years of growth amid an oil boom.
Still, Chavez called 2009 "a year that's ending well." He said in a televised speech Wednesday that those who predicted an economic disaster have been proved wrong and that Venezuela has withstood a "crisis of world capitalism."
The economic contraction during 2009 has coincided with inflation of about 27 percent, putting Venezuela in a situation that analysts call "stagflation." Year-end figures have yet to be released, but Venezuela is expected to continue to have the highest official inflation rate in Latin America.
The Central Bank has cited weakness in demand for oil, which accounts for 94 percent of Venezuela's export earnings, as well as uncertainty over the world's recovery from the economic downturn.
Non-oil sectors of the economy also contracted in 2009 by 1.9 percent, according to the Central Bank.


Updated : 2020-12-02 15:50 GMT+08:00