The Minister for Basic, Strategic and Socialist Industries, Juan Arias, claims there will be an industrial growth rate close to 30% in 2017, compared to the poor results of 2016, a year marked by water and electricity shortages due to El Niño.

Crazily enough, el Niño is not one of the main reasons why the national industry accumulates close to four years of recession. According to the Encuesta Cualitativa de Coyuntura Industrial (“Qualitative Survey of Industrial Situation”) carried out by Conindustria in the first quarter of 2017, over 80% of companies surveyed consider that the main factors restricting local production are political and institutional uncertainty, low national demand, unavailability of foreign currency and difficulties finding raw material suppliers. This last factor is critical.

A study published by Obuchi, Lira and Raguá in 2016, in which high executives and trade union representatives from different sectors were interviewed, concludes that:

“The most burdensome problems of this policy are related to the fact that some of the affected companies are the suppliers of key inputs for other economic activities. In the hands of the state, companies in industries such as steel, cement, petrochemicals, or agricultural inputs are failing to meet demand, and they end up disrupting or restricting the economic activities in other areas such as construction or manufacturing. The most mentioned case was a steel company, Sidor. There were also mentions of Agropatria (agrochemicals), Sidetur (steel), “Lácteos Los Andes” (dairy products), and the cement plants that used to be Holcim, Cemex and Cementos La Vega, that are at best working at minimum.”

Arias also considers that the figure provided by the International Monetary Fund of a 12% drop in GDP está abultada; its been jacked up. 

We beg to differ.

According to the Conindustria Survey mentioned before, local private industries are using only 32.4% of their installed capacities, a decrease of 3.9% from last year, and a decrease of 16.4% since the beginning of recession in 2014 (the number has remained below the 50% mark ever since). Also, when crossed with official data (available up until 2015), the levels of used installed capacities show a correlation of 91.3% with Venezuela’s y/y growth rate of real GDP.

So if the used installed capacities keep on falling, the GDP is bound to drop a lot and there’s just so much you can blame on that poor Niño.

18 COMMENTS

    • Foreign direct investment has dropped from over US $3 billion to US $12 million.
      The economy is not going to grow 30% in 2017.
      Every analyst is predicting year over year declines in every sector of the country except, death, suffering, starvation, crime and corruption.
      Oil production has dropped to around 1.8 million barrels per day. This decline is more than predicted at the start of the year. Originally oil production was expected to be around 2 million barrels per day by the end of the year. By the end of 2017 oil production may be as low as 1.5 million barrels per day.
      When oil exports that are 95% of your foreign currency, have dropped in price by 60% and your export volumes have dropped by 50%, it is not possible to have an expanding economy if you rely on imports for basic goods.
      Venezuela has the highest lift costs of any OPEC member. Add to that the fact that 50% of the oil produced goes to, countries in the region allied with Maduro, Cuba, China and Russia or is subsidized for domestic production. Basically for every 2 barrels that PDVSA lifts out of the ground, they only have the ability to sell one barrel.
      As production declines and fixed overhead and employees remain the same, lift costs per barrel continue to climb. PDVSA refuses to make their financial statements public.
      It is very possible that PDVSA is no longer turning a profit at all. At 2 million barrels per day production, default was imminent.
      The regime still claims to have US $10 billion in reserves. I find that hard to believe when they were trying to peddle a US $5 billion bond for US $1 billion.
      Why wouldn’t they dip into reserves before offering an 80% discount on new debt?

  1. Anabella, it’s good to read your articles on CC.

    Are you familiar with the term голодомор? It means something like ‘death by starvation,’ or words to that effect. One might pronounce it “jolodomor” in Spanish.

    The izquierdistas have their hero, Vladimir Ulyanov, so called Lenin. And as you know, he committed more murders than western civilization had ever seen…since maybe the Lombard invasions? Maybe since Yersinia Pestis?

    I have heard first-hand stories of bored, tired red army ignoramuses whose hands hurt from shooting people in the backs of their heads in 1918. I know (and I do know) of people unable to go into NKVD police stations because of the stink of the dead bodies THAT WERE STILL IN THE POLICE STATIONS.

    The socialists often got tired of the tedious, enervating, daily chore of dealing with the end of lives, the goddamned blood, the fucking shoveling, the fucking screaming and pleading kids, but they had a plan to fulfill.

    I never heard that they thought that they and their families might get the same treatment, but shit, I wouldn’t have given it too much thought either. Like a WWII bomber pilot who, when he saw another bomber shot down, thought, “It’s not me.”

    Vladimir Ilyich (I shook when I typed Ilyich) Ulyanov is/was the 2nd most depraved, evil man who ever lived, at least in the West, but his spawn Dzhugashvili exceeded his master…he’s #1.

    Murder on murder. Blood on everything, boring, sticky blood. Bodies. Orphans.

    Locally, we have our Castro brothers. They would smash our faces with baseball bats and get Papa Francisco’s approval.

    Our faces. Our sisters’ and our parents’ faces. Badly aimed bullets, cracked skulls. Laughing murderers.

    I know way too much; I wish I could forget all of it. Antes de tales pruebas, todas las montañas se desmoronan.

    Anyway…Vladimir Lenin said, “The goal of socialism is communism.”

    God bless you.

  2. I’m pretty sure the Chavistas picked up a copy of Atlas Shrugged 20 years ago, and said to themselves, “We can top that!”

  3. Funny I mentioned Atlas Shrugged to a nice couple from Vz starting a business in Miami, both were educated and were making a major downshift in occupations to rebuild their lives in Miami.

    They had never heard of Atlas Shrugged, here in Boca, I see a lot of high school kids get the book as assigned reading.

    Idea for an article, what three (four, five) books should be suggested reading to prevent Chavisimo/Socialism? I would start with Atlas Shrugged, perhaps something by Mieses?

    • I have never been a follower of the Index Librorum Prohibitorum, or a proponent of book burning, but if there is any trash fully deserving of going up in flames in this world it would be anything written by Ayn Rand.

      If you want to help your friends get them a subscription to the National Review. Mises is good, or better yet, The Road to Serfdom or anything else by Hayek.

        • Well, for starters the writing is beyond awful, but that’s a matter of taste, so let’s forget about the literary merits of her work and just focus on her political and economic ideas.

          Rand was an anarcho-capitalist; she believed in the unfettered right of the individual to work towards his goals. Sounds good, until you realize that she actually means that John Galt has the right to trample on everybody else’s rights.

          Hayek rejected this view. He rejected dogmatic laissez-faire, and accepted that some goods, like roads and pollution abatement, need to be supplied by the government. Because of this Rand called him “The God damned abysmal full”, “so saturated with all the bromides of collectivism that it is terrifying”, and “God damn the total, complete, vicious bastard” (a lot of references to God for an atheist). Somebody who says that Hayek is “saturated with the bromides of collectivism” just doesn’t get it.

          Even if you believe that roads can be supplied by private individuals (like the Pennsylvania turnpike and others), who hope to recoup their investment by charging tolls, you still need government to ensure that those private individuals have access to the land needed for the project (by asking the government to exercise eminent domain), that the road path is chosen in a way that it benefits the community while minimizing the damage done to property owners whose land will be taken, that people whose property is affected are compensated fairly, that the road design and materials meet safety code standards, etc. The alternative to this is a macho guy yelling on TV “expropiese” and colectivos kicking people out of their property without compensation.

          • Nice rant, but still doesn’t refute my assertion that so many of her quotes can be directly applied to chavismo.

          • To each his own, I guess. Call it a rant if you like, but property rights are meaningless without a strong state committed to the rule of law. None of us likes to be in a situation where other people (either the government or individuals who think that they are more “avispaos que tu”) trample on your rights. I would argue that the non-existence of a solid legal framework is the main reason for Venezuela’s problems. Even in the days of the cuarta, when something almost resembling a judicial system existed, the legal framework was often not respected, because you know, I have a cousin who has a friend who “es pana del juez”. I don’t dispute that many of Ms. Rand’s quotes apply to Venezuela, but the society that she advocated for is not one that I would like to see installed in any place where I live.

            By the way, there is an article about Venezuela in the September/October issue of The Austrian, the magazine of the Mises Institute (available online at Mises.org). Mises.org is a treasure trove of literature on economic freedom.

      • Ok yeah true Rand was a right extremist and I don’t agree with all of her ideas but some of them have merit. Look at the following quote from Atlas Shrugged and see how closely it resembles current day Venezuela:

        ” When you see that trading is done, not by consent, but by compulsion–when you see that in order to produce, you need to obtain permission from men who produce nothing–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed”

      • Rand isn’t for everyone. I loved Atlas Shrugged, but the 70 page soliloquy by Galt was too much. Her writing style is heavy handed.

        But, that’s writing. My wife loves some hack writer that I cannot stand… reads every one of their novels. I got about 30 pages into it and I thought our parrot cage (African Grey Congo and Norwegian Blue) was too good for it.

        And Objectivism isn’t for everyone. But Atlas Shrugged perfectly describes the Chavistas.

  4. Thanks for the response Fatima. Rand also speaks of the role of government in maintaining the rule of law and protecting property rights so I’m not quite sure where the anarchy concern arises. And while she may have gone off on Hayek, I personally would not label her work as trash and deserving of being burned. But, as you say, to each his own.

  5. I grant you Atlas Shrugged reads like Ayn Rand was getting paid by the word.

    As for her belief in where and how powerful a government should be, she seems to acknowledge the need for a government but one small and constrained enough to little threat.

    I don’t think her works are a bible on how to live, but all of her works are a great warning on how the politics of envy seek to always increase the power of government. (with of course the ‘right’ people in charge) That those with power are happy to let everyone else suffer so long as they get to be on top of the heap. Thus you have a government minister blaming El Nino as the cause of the suffering while wearing a really nice watch..

    FWIW, took a Lyft the other day to pick up my car from the dealership, driver is a CPA with KPMG out of Caracas, now he’s a Lyft driver trying to learn enough English to return to his career. I think the USA is better off having this guy in it, and Vz is worse off for him leaving. However, a crooked government minister is better off having him far away and unable to audit the books.

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