Venezuelan non-oil exports fall; the rentier model strengthens, 30th August 2010
By Víctor Salmerón.- The value of non-oil exports plunged 58 percent compared to 2006 Economy Amid an economy increasingly dependent on oil revenues, President Hugo Chávez devalued the Venezuelan currency on January 8, 2010 and established two telephone lines: 0800Exporta and 0800Produce for businessmen wishing to replace imports and for all those who want to export. For now, the strategy has failed to contain the economic damage. Non-oil exports barely represented USD 775 million in the second quarter, 8.9 percent compared to the same period of 2009, after a sharp decline in sales of steel, chemical products and plastics. The overall performance of the economy during the first half shows that non-oil exports amounted to USD 1.59 billion, a serious decrease (58 percent) compared to the same period of 2006, when the Venezuelan economy reached the highest level in the decade (USD 3.79 billion); it also shows stagnation with regard to 2009, taking into account that non-oil exports amounted to USD 1.53 billion a year ago. José Guerra, a former economic research manager at the Central Bank of Venezuela (BCV) said that although one could argue that little time has passed for the devaluation of the Venezuelan currency to bear fruit in terms of exports, "there is nothing to export different from oil; there are no industries." Meanwhile, private industrial production, which is the tool that would allow the diversification of exports, fell to its lowest level since 2005 in the first half of the year, to 5.5 percent versus the same period in 2009. In comparison with the first half of 2008, where production peaked in the last six years, non-oil exports collapsed 15 percent, even 3.5 percent compared to 1998. Venezuela has consolidated a rentier model under which it basically exports oil, gets foreign exchange to import products and expends the money domestically while the domestic industrial production decreases. Oil currently provides USD 95 of every USD 100 entering Venezuela. "We are witnessing the results of a policy based on anchoring foreign exchange rate to lower inflation: industry is finished and inflation rebounds," José Guerra said.