Venezuela’s economy will contract for a second year in 2010, missing the official forecast of near-zero growth, before rebounding next year, a government official said in an interview.
Gross domestic product will shrink 1 percent to 2 percent this year and may expand 2 percent to 3 percent in 2011, the official, who isn’t authorized to speak publicly, said today in Caracas. Inflation will accelerate to 28 percent by the end of the year from 20 percent through August, he said.
Venezuela, the largest oil producer in South America, has remained in recession as the rest of the region expands. A drop in oil production and a decline in imports as a result of tighter foreign exchange restrictions have stifled manufacturing, while President Hugo Chavez’s nationalizations of companies chase away foreign investors.
The median forecast of 10 banks surveyed by Bloomberg, including Barclays Plc and Morgan Stanley, is for the economy to shrink 4 percent this year and grow 1.55 percent in 2011.
Venezuela’s economy will be the only one to contract in the Western Hemisphere this year, according to the International Monetary Fund.
The government, which last month sold $3 billion of 12-year bonds, “probably” won’t sell more dollar-denominated debt securities this year, the official said. Petroleos de Venezuela SA, the state oil company, will sell $3 billion of bonds next month, he said, without providing more details.
International reserves, which have fallen 18 percent this year to $28.7 billion, will remain at about $28 billion through the rest of the year, the official said. The central bank transferred $6 billion to an off-budget development fund earlier this year to finance government infrastructure projects.
The economy should grow next year as the government sells more dollars to large corporations for imports through the foreign exchange board, known as Cadivi, the official said.
Chavez shuttered the unregulated currency market in May that provided dollars at a weaker exchange rate than the official rates of 2.6 and 4.3 per dollar.
Small- and medium-size companies, including small individual dollar requests, can turn to the central bank’s currency market, known as Sitme, where dollars can be purchased at 5.3 bolivars, he said.
Sitme has traded $2.2 billion of government and PDVSA bonds since opening on June 9.