Further Proof Socialism Doesn't Work

Someone should probably shoot Chavez before he does more damage to the Venezuelan economy (I can say that because he is guilty of trying to kill the President of Colombia):

Venezuela’s economy fell deeper into recession in the fourth quarter, falling behind other Latin American economies that are seeing growth accelerate as they emerge from the global financial crisis.

Gross domestic product contracted an unexpected 5.8 percent in the quarter from a year earlier, the central bank said today in an e-mailed statement, after shrinking 4.6 percent in the third quarter. The contraction surpassed eight of nine analyst forecasts in a Bloomberg survey whose median estimate was for a 4.6 percent drop.

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The recession may last until the third quarter of this year after President Hugo Chavez devalued the currency as much as 50 percent in January, a move that may damp private consumption, Fuentes said.

‘Much Worse’

Venezuela’s oil sector contracted 10.2 percent from a year earlier and the non-oil sector shrunk 4 percent in the quarter, the bank said in the report.

“This is much worse than expected,” Boris Segura, an economist at RBS Securities Inc. in Stamford, Connecticut, said. “There’s further downside in the first half of the year due to the recessionary effects of the bolivar’s devaluation.”

Manufacturing fell 6.9 percent and the mining industry, a sector the government has highlighted as strategic to boost non- oil exports, tumbled 4.8 percent. The economy contracted 3.3 percent during 2009.

Venezuela, the biggest oil producer in South America, cut imports 43 percent in the quarter in a bid to save dollar reserves after oil output fell in line with OPEC production quotas.

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Venezuela’s economy may contract again in 2010 if manufacturing and retail sales are affected by rolling blackouts and a growing nationwide electricity crisis, Asdrubal Oliveros, a director at the consulting firm Ecoanalitica in Caracas said.

The government has ordered companies to reduce energy consumption by 20 percent or face indefinite power cuts. It continues to enforce rolling blackouts outside the capital, Caracas, in a bid to prevent a collapse of the power grid.

“If the electricity situation is resolved in the second quarter, we could see growth in the second half,” Oliveros said in a phone interview. “But if blackouts occur every 36 hours, the outlook is negative and the economy could contract as much as 5 percent this year.”