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Oil
sector
drives economic rebound
The
strong economic growth observed in the second quarter of the year appears
to be carrying over in to the third, as robust domestic demand and high
oil prices are likely to sustain the expansion.
On 1 October, the price for the Venezuelan mix of crude
oils reached US$ 42.17 per barrel, which raised the annual average to US$
32.76 – the highest price observed in more than 20 years and 23.3% above
the same price last year.
Moreover, at its current level, the oil price is significantly
above the government’s budgeted US$ 18.50 per barrel oil price.
By law, a share of the windfall profit has to be deposited in the
Macro-economic Stabilization Fund at the Central Bank (FIEM, Fondo
de Inversión para la Establización Macroeconómica).
However, the government is likely to funnel proceeds into public
spending to promote its social agenda, which is likely to help bolster the
current economic rebound.
Oil
price reach new highs
The
current oil price bonanza is driven by a number of factors.
Concerns about sufficient supply emerging from the continued
conflict in Iraq, social unrest in Nigeria, uncertainty about the future
of Russian oil giant Yukos and inventory concerns in the United States
bolstered the oil price in September.
The price spike has been fuelled further by rising demand in Asia,
particularly in China, and the pick up in demand from the United States.
The fact that the oil price has remained persistently above the
official OPEC price band of US$ 22 to US$ 28 per barrel throughout the
year has prompted OPEC member countries to raise output levels on four
occasions this year – by a total of 3.5 million barrels per day - to
keep the world crude oil market well supplied.
In its 15 September meeting, OPEC decided to raise output by 1
million barrels per day (mbpd).
As a result, the Venezuela quota has been raised from 2.7 mbpd in
April to 3.1 mbpd starting 1 November.
Given the rising concerns that high oil prices could begin to
derail the healthy global recovery, OPEC members pointed towards the
capability of member countries to raise output an additional 1.5-2.0 mbpd.
The additional quota will boost the entire economy since the oil
sector in Venezuela is the backbone of the economy, as it constitutes the
key provider of foreign exchange and government revenues in terms of
royalties and dividends.
Therefore, the current revival of economic growth should be
sustained, as both oil output and prices are likely to provide a strong
push to activity.
Non-oil
sector continues rebound
According
to the Central Bank, activity in the private manufacturing industry rose
27.6% in July over the same month last year.
The July figure was below the 35.1% increase observed in June but
helped sustain the strong recovery in manufacturing activity observed
since December of last year.
Output growth in July was particularly pronounced in clothing, wood
products, automotive vehicles and machinery and electrical equipment.
The only sector not to experience double-digit growth over the same
month last year was common metals.
Businesses continue to benefit from the robust pickup in global
demand but also from the rapid resumption of domestic economic activity.
Retail
sales activity remains on accelerated trajectory
National
retail sales rose 28.0% in July, which was up from the 26.6% expansion
observed the previous month.
Even though most sectors remained in double-digit growth territory,
automotive vehicle, supermarket and drug store sales provided the lion
share of the boost to the continued resilience of retails sales in July.
The only sub-sector to experience a decline in activity was
household items sales.
A look at the variation in the moving annual average of the retail
sale index indicates that sales continue their upward trend initiated in
March.
Accordingly, retails sales were up 14.9% over July of last year,
which represented an increase compared to the 11.3% figure observed in the
previous month.
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