Thursday, December 11, 2008
Venezuela Squeezed by Lower Oil Prices
Foreign Confidential....
Lower oil prices are squeezing Venezuela's economy.
Should oil prices average $50 a barrel in 2009, the fiscal budget could collapse from the meager 0.7% of GDP surplus for this year to a major 5.5% deficit in 2009.
High inflation--still well over 30% year on year--and shortages are already contributing to the deterioration of the popularity of the Chavez government, clearly expressed through the local elections, which resulted in the loss of important areas such as the capital Caracas, Miranda, Zulia, the two most populous states, as well as Nueva Esparta, Carabobo and Tachirain.
The discontent is deepening despite heavy subsidization of key goods and significant infrastructure and social spending in recent years.
Thursday, 11 December 2008
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