Last year’s growth spurt was the story of an out-of-control government, spending all it had (and then some) in order to engineer a consumption boom that would ensure victory at the ballot box. The stuff we need to produce in order to get out of this hole and grow in the long term – well, those are laggards. It’s no wonder our economy is already slowing down.
Let’s take it one bar at a time.
The fastest growing sector was financial and insurance services. This doesn’t mean Venezuela is becoming Hong Kong or London, but rather we issued more credit cards, processed more Cadivi applications, gave out more loans at gunpoint (more on that later), and handed out more checks to beneficiaries of social policy.
Does this mean we now have better banks and insurance companies? Is our financial system healthier now than before? Ask anyone who’s ever been to a Venezuelan bank.
The second fastest-growing sector was construction. Yes, the government ramped up public housing construction on the eve of an election. This was financed by massive injection of Chinese loans and an unprecedented fiscal deficit.
Will this make us wealthier in the long run? Is it sustainable? No, and no.
Third (man, this is like shooting fish in a barrel) was “Commerce and repairs.” Hmm, let’s see, if you are in the middle of an oil boom and you import massive amounts of stuff, you need people in the stores to sell the stuff. All this oil money slushing around has to go somewhere, right?
So yes, there are more stores opening at later shifts, more shopping malls, more beauty salons and gyms, and more “repairs,” which basically means handymen and mechanics have a lot of work trying to fix the lighting in those beauty salons and gyms and shopping malls, and repairing the used cars everyone drives to get to … shopping malls and gyms and beauty salons.
Will this make us wealthier in the long run? Are these the foundations of a productive economy? You know the answer…
Next up: “Community services and non-profit personal services.” Oh dear … let’s just say this is not quite like making computers or TV sets, or even extra-heavy oil.
Next: “Communications.” Ah, always one of the fastest-growing sectors in our economy. As oil money slushes around, people have more cash in hand … to text … and surf the web … and tweet … and read Caracas Chronicles on their phones (=silver lining).
The communications sector hasn’t grown because Venezuela is some Finnish-style bandwidth paradise. As you all know, Venezuela has one of the slowest Internet services in Latin America. So let’s not confuse this with productivity.
The following “growth engine” was “Transportation and storage.” Of course – all the imported stuff we are spending our oil windfall on needs to be shipped, stored, and transported. Our ports are clogged, busy as heck, and that shows up in the statistics.
Does this mean we are on our way to becoming Singapore or Panama? Is this the foundation of future growth? No. It simply means we are importing a lot of junk, and it’s taking a lot of time to do so.
Next up: “Government services…” (Deadly silence) … I guess the silver lining here is that Government Services is not THE fastest growing sector. But let’s be real – growth in government is not the way to go.
The only things that SHOULD be the foundation for a new economy are at the bottom of the table: Manufacturing, Oil, Mining, Energy, Water, and the rest (which, I assume, would include Agriculture, Medical Services, and the like).
To me, this picture encapsulates the petro-state-rentist-chavista-clusterf**k in all its glory. Behind the facade of supposed chavista “growth,” behind the hollow claims of a mini-economic miracle, the graph shows the usual oil boom we’ve seen time and again.
If a good graph tells a story, this one is pretty darn perfect. We might as well frame this puppy and hang it in the Galería de Arte Nacional.