Venezuela economy to shrink 7-10 percent this year: business chamber

CARACAS (Reuters) - Venezuela’s asphyxiating economy will contract between 7 and 10 percent this year, the head of the country’s main business chamber Fedecamaras said on Wednesday at the Reuters Latin America Investment Summit in Caracas.

Fedecamaras’ president said that leftist President Nicolas Maduro’s new, globally-condemned legislative superbody would only deepen a severe economic crisis, in which millions are suffering food and medicine shortages.

“We do not see that the National Constituent Assembly is going to be a solution, rather we believe that it will deepen, in a very important way, the serious economic situation that Venezuelans are experiencing,” Carlos Larrazabal, Fedecamaras’ president, said in an interview.

The 60-year-old U.S.-educated businessman said the country needed to change its socialist model.

“The private sector is part of the solution and not part of the problem,” he said at Fedecamaras’ headquarters in a middle class area of Caracas near where anti-government protests have convulsed the country for four months.

Fedecamaras has long been at odds with the government after its president at the time, Pedro Carmona, briefly became interim president of the country in a 2002 coup against late socialist leader Hugo Chavez.

Unpopular President Nicolas Maduro blames the crisis on an “economic war” by the business elite as well as Washington. The president says the assembly is necessary to achieve peace in Venezuela.

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For Larrazabal, the “economic war” is in fact against the private sector rather than waged by it. According to his records, since Hugo Chávez took office in 1999, the government has expropriated more than 1,500 businesses and 5.2 million hectares of land “which today are not productive.”

Although there have been no official figures for almost two years, the economy contracted 18.6 percent in 2016, the worst in 13 years, according to data obtained by Reuters in early 2017.

“All the indicators reflect that gross domestic product is going to fall this year between 7 and 10 percent,” said the businessman.

“We are falling faster than the U.S. economy fell in the crisis of the 1930s.”

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Reporting by Deisy Buitrago; Writing by Girish Gupta; Editing by Hugh Bronstein and Phil Berlowitz