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venezuelan economy

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venezuelan economy

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    1. 9/15/2011 1 Venezuelan Economy Carl Pickerell

    2. 9/15/2011 2

    3. 9/15/2011 3 Topics of Discussion Basic history of Venezuela Introduction to the Venezuelan economy Recent political turmoil Problems facing Venezuela Future of Venezuela

    4. 9/15/2011 4 Venezuela Details about this topic Supporting information and examples How it relates to your audience

    5. 9/15/2011 5 Country Bio Located in South America west of Columbia 912,050 sq km (Roughly 2 times the size of California) Population: 24,654,694 (July 2003 est.) Half of the population lives on < $3 7th largest Latin American country

    6. 9/15/2011 6 History On of 3 countries which made up Gran Columbia Separated in 1830 Ruled by violently Benevolent Dictators First democratic elections in 1958

    7. 9/15/2011 7 Political Climate Federal Government centralize in Caracas Type of Government: Federal Republic Leader: Hugo Chávez Frías

    8. 9/15/2011 8 Cháves Colonel (ret.) Venezuelan army Attempted a coup against sitting president in 1992 President since 1999 Close ties to Castro Nationalist Party

    9. 9/15/2011 9 Campaign Promises Ending Corruption *Clamed it drained 15% annual budget Halting privatization of state assets Reconcile the petroleum wealth

    10. 9/15/2011 10 Government $38.2 Billion in debt (2001) 30% Annual budget used to pay off debt 75%+ is spent on fixed assets * Debt services *Social security *Personnel(Government employees)

    11. 9/15/2011 11 Problem president Heavily criticized by democratic party Forced to resign in 2002, but reacquired presidency shortly after “..He has the ability, but lacks the talent and temperament…” Has alienated business, labor, church, and military Become increasingly dictatorial Popularity only 30%

    12. 9/15/2011 12 Economy Extremely complex Japanese hires full time economist to try and understand Exports: Oil, Aluminum, Steel, and Agricultural products 64% service, 23% industrial ? Unemployment 11% and ? Stock market has dropped 70% in last 3 years

    13. 9/15/2011 13 GDP GDP=$128.8 billion Growth rate *-11% (2003) *-7.2% (2002) Per capita = $8000

    14. 9/15/2011 14 Oil 5th largest exporter 80% of Exports 50% of government rev 1/3 GDP Produces 2.67 million BPD

    15. 9/15/2011 15 Inflation Inflation Rate: *20% (2001) Wholesale rate = 48.9% Consumer rate =27.1% Government has been lax in enforcing pricing controls

    16. 9/15/2011 16 Consequences Cost of living goes up Shortages on goods with government controlled price controls Consumer inflation will go up! Over-valued currency Currency over-valued by 40-50%

    17. 9/15/2011 17 Money supply $13billion spent to protect the value of the Bolivar $4.1 billion due shortly Currency devaluation expected shortly NO confidence in currency Those who do invest, do so in foreign currencies

    18. 9/15/2011 18 Investment Investment capital is shrinking Reasons Interest rates are high and rising Makes long term investment expensive Cars and houses are forced as collateral Makes purchases cost 2-3 times the value to buy Currency devaluation When currency is devalued, foreign investors will loose more than half Political turmoil Land redistribution Undermines free enterprise

    19. 9/15/2011 19 What went wrong

    20. 9/15/2011 20 What went wrong(Continued) Oil prices dropping in late 2000 Lack of diversification Rely to heavily on oil Lack of economic growth during High price period Inventories Hiring Extra lines of products Protective trade barriers

    21. 9/15/2011 21 Future Lower oil prices once non-OPEC markets open up Currency devaluation Higher inflation

    22. 9/15/2011 22 What is needed Monetary reform, curb inflation Investment incentives infrastructure already there Diversify Employment Trade barriers removed Stable political climate

    23. 9/15/2011 23 “If it(Venezuela) fails to diversity, It dooms itself to a seesaw economic future”

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