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As recession deepens, Chavez sees transition

 Customers choose vegetables at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quarter from the sam...
 A customer asks for the price of goodies at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quarter...
 Customers stand next to a butcher's counter at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quar...

Venezuela Economy

Customers choose vegetables at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quarter from the sam...

Venezuela Economy

A customer asks for the price of goodies at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quarter...

Venezuela Economy

Customers stand next to a butcher's counter at a market in Caracas, Wednesday, May 26, 2010. Venezuela's economy shrank 5.8 percent in the first quar...

A day after the Central Bank reported Venezuela's recession has deepened, President Hugo Chavez said Wednesday that it's a natural part of transforming the country from a capitalist to a socialist economy.
"The economy that's falling in Venezuela is the capitalist economy," Chavez said in a televised speech, referring to the bank's report that the economy shrank 5.8 percent in the first quarter after a 3.3 percent contraction lasts year.
Critics say the Chavez government's price controls and expropriations of private companies are responsible for Venezuelans facing shortages of some foods and struggling with 30 percent inflation _ a rate among the highest in the world.
Economist Orlando Ochoa said a key factor in the downturn is also a decline in the amount of oil industry earnings being injected into the economy.
"The controls don't work anymore because there is an underlying economic problem, which is the fall in the flow of oil income," Ochoa said in a telephone interview.
Official figures say the state oil company, Petroleos de Venezuela SA, turned over to the Central Bank less than 43 percent of the dollars it earned from oil sales in the first quarter. Ochoa noted that percentage has been decreasing in recent years, and said the resulting shortage of dollars led to a drop of 39.7 percent in imports.
The oil-exporting country remains largely reliant on imported food and manufactured goods. Economists say government price controls and currency exchange controls have contributed to shortages of some foods.
Shopper Josefina Perez, a 74-year-old retiree, complained that the Caracas market she visited Wednesday didn't have sugar, butter or fat-free milk _ so she has to turn to street vendors who charge "sky-high" prices.
"There are many things that can't be found, like sugar, vegetable oil, butter, corn meal," said another shopper, Joselina Santeliz, a 60-year-old teacher who said she is forced to buy other items instead to make do.
A Central Bank survey in April found shortages of basic food items at more than 14 percent of supermarkets and other sellers visited, a slight rise from 13 percent the previous month.
Chavez's government has nationalized food companies along with others in sectors from electricity to steel. The government now controls 75 percent of coffee production, 52 percent of sugar, 42 percent of corn meal and 40 percent of rice.
Carlos Larrazabal, who heads Venezuela's largest industrial business chamber, said Wednesday that as long as the government continues economic controls and expropriations "there won't be a climate" for investment.
Chavez predicted at an event with farmers in the countryside that agricultural output will keep growing. "What does it matter to me if imports of vehicles fall?" he said.
The president said that due to the economic decline, his opponents are "celebrating but they don't realize that what they're celebrating is the wake of capitalism."
"Let them continue celebrating. Put out candles at the funeral because we're going to bury Venezuelan capitalism," Chavez added. "And of course the sinking of capitalism and the rise of socialism has to bring contradictions, difficulties."


Updated : 2021-08-05 08:56 GMT+08:00