Growth forecasts lowered despite first half performance.(Venezuelan economy)(Brief Article)(Statistical Data Included)

Venezuelan President Hugo Chavez lowered his country's growth forecast, with the economy now expected to expand by only 3.5-4% in 2001, down from earlier predictions of 4.5% growth, as the economy's performance continues to disappoint. The central bank has yet to release second quarter and first half figures, but the President suggested that they would come in above market expectations, possibly as high as 4%. This creates somewhat of a contradiction, with strong growth tending to be indicative of improving prospects, rather than a downward revision. Alejandro Grisanti, Venezuelan economist for BSCH, in Caracas, believes that this confusing signal is typical of the current administration, whose reckless comments, such as the threatened capital controls, have unnerved investors in recent weeks. Indeed, Grisanti expects expansion to amount to only 3% this year, with stagnation in the oil sector, which makes up 30% of GDP, dragging down the overall growth rate. However, he believes the rest of the economy will grow at an encouraging 4%, despite the burden of the overvalued bolivar.

[C]2001 Business Monitor International

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