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Oil report

FACTBOX-Venezuela's economic contraction

Aug 20 (Reuters) - Venezuela’s economy shrank for the first time in over five years in the second quarter after a government-driven consumer boom petered out and the global recession finally bit South America’s biggest oil exporter.

The economy contracted 2.4 percent in the three month period and is down 1 percent for the first half of the year, the Central Bank said on Thursday.

High public spending by President Hugo Chavez during an oil bonanza meant even the poor had some money to burn, spurring a five year shopping spree defined by double digit growth. But the boom ended abruptly in the April-June period.

Following are some key facts about the economic rollercoaster during Chavez’s decade in office.

* Chavez, a former paratrooper who spent time in jail after leading a failed coup in 1992, won the presidency in 1998 and took office early the next year. Oil prices averaged $16 back then and the economy was in a recession that saw GDP shrink 6 percent in 1999.

* Venezuela is a classic petro-state. Income from oil represents about half the OPEC nation’s GDP and close to 90 percent of exports. As such, the economy grew at a steady pace in the first two years of this decade as oil prices gradually recovered.

* In 2002 Venezuela’s fortunes took a sharp turn for the worse and the economy plummeted 8.9 percent. Political tensions reached boiling point with huge marches against Chavez after he used extraordinary powers to pass a series of laws including a land reform and sacked the management of state-oil company PDVSA. A military rebellion forced Chavez from office for 48 hours but he was soon reinstated.

* Anti-Chavez protests continued and at the end of 2002 opponents managed to shut down the oil industry for two months. As a result the economy collapsed 26.7 percent in the first quarter of 2003.

* By the end of the year things were on the mend and in the first quarter of 2004 GDP jumped a whopping 36 percent. With oil flowing again and prices on the up, Chavez began a marathon spending spree, building a network of clinics in poor urban districts and creating a subsidized chain of food markets.

* In 2006, Chavez was on a high, backed by huge popular support and swelling government coffers. He was reelected for a new 6 year term by a huge margin at the end of the year as voters rewarded him for their increasing wealth.

* Since then Chavez has radicalized his program, fully embracing socialism and nationalizing most of the nation’s industry including several huge oil projects owned by foreign companies. The economy still grew 8.4 percent in 2007, but in a sign his spend-and-nationalize model was running out of steam, it slowed to 4.8 percent last year despite an average oil price of $87 per barrel and a peak of $147.

Reporting by Frank Jack Daniel, Editing by Andrew Hay

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