Thursday November 19, 2009
Chavez blames Venezuela economic drop on OPEC cut
CARACAS (Reuters) - Venezuelan President Hugo Chavez said on Wednesday the South American nation's unexpectedly high third-quarter economic contraction was due to its compliance with OPEC-mandated production cuts.
Chavez said it would be easy to reverse the GDP trend if Venezuela were to disobey OPEC agreements under which, he said, local output had been reduced by nearly 400,000 barrels per day and the global crude price had stabilised.
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Hugo Chavez in Portuguesa, about 350 km (217 miles) west of Caracas November 8, 2009. Chavez said on Wednesday the South American nation's unexpectedly high third-quarter economic contraction was due to its compliance with OPEC-mandated production cuts. (REUTERS/Miraflores Palace/Handout/Files) |
In a second consecutive quarterly contraction that many see as recession, Venezuela's economy shrank 4.5 percent in the third quarter of 2009, compared with the same period of the previous year. Oil GDP slid 9.5 percent.
"One of the biggest factors in the GDP fall is the decline in the so-called oil GDP," Chavez told a meeting of his United Socialist Party of Venezuela (PSUV).
"But the drop in the oil GDP is the (OPEC) cut."
Chavez said Venezuela had complied with its roughly 10 percent share of more than 4 million barrels per day OPEC cuts as a "geopolitical decision" to help shore up prices, not due to local wells drying up or lack of investment.
In theory, he added, Venezuela could therefore reverse the GDP decline by breaking with OPEC. "Fine, GDP would immediately go above zero. But what would that bring as a consequence? That oil prices would collapse to $20 or more."
(Reporting by Andrew Cawthorne; editing by Carol Bishopric)
Copyright © 2008 Reuters
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