Maduro through the minefield
Since taking over from Hugo Chavez, Nicolas Maduro has faced frequent challenges, not only from the opposition but also from within his own United Socialist Party of Venezuela (USPV). During his 15-month presidency, Maduro has had to see off challenges over his appointment as acting President, and contestation to his victory in the April 2013 presidential election. He has been subjected to vigorous criticism for his perceived lack of charisma and ability to govern. In addition, since February the country has seen a wave of mass protests. These demonstrated a sharp polarisation of Venezuelan society, which has been exacerbated by two presidential elections in quick succession and an increasingly unfavourable economic situation. With a view to easing the tension, round-table discussions were set up. However, the dialogue between the government and the opposition quickly broke down. On the one hand, the government appeared unwilling to offer concessions, and on the other, the opposition is too divided. The recent sacking of Jorge Giordani1 highlighted the growing divisions within the USPV, and the President by no means enjoys unanimous support. Thus Nicolas Maduro’s position is growing ever more difficult, and the opposition continues to call for his resignation.
■ Inevitable recession
Economic growth in Venezuela slowed sharply last year, primarily for structural reasons. Official figures show growth of 1.3% in 2013, compared to 5.6% in 2012. The slowdown was most marked in the non-oil sector, which had been generating good performances in recent years. Key sectors such as construction and manufacturing saw activity contract (by 2.3% and 0.3% respectively). Only the services sector was resilient, with notably strong growth in financial services (21.6%), communication (6.5%) and utilities (3.1%). Growth in the oil sector also declined (from 1.4% in 2012 to 0.9% in 2013) but remained above the average rate of the past 10 years of 0.3%.
Economic growth will continue to slow this year, for a mix of structural and cyclical reasons. A recession now looks inevitable. From a structural point of view, the business climate in Venezuela is very poor, as a consequence of increasingly interventionist policies (expropriations,nationalisations, etc.). Moreover, the private sector is still suffering from a lack of dollars in the economy. Lastly, oil production is slowly declining due to a lack of investment (linked to the substantial transfers from state oil company PDVSA to the government), despite high oil prices.
BY Valentin LETHIELLEUX
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