Venezuela: Economy Recovering After Contraction

FABIOLA SANCHEZ

CARACAS, Venezuela (AP) — Finance Minister Ali Rodriguez said Wednesday that Venezuela's economy is beginning to recover after its first contraction in five years and predicted annual growth will reach 4 percent by 2012.

The economy decreased 2.4 percent in the second quarter — down from a 7.1 percent increase a year earlier — as depressed world oil prices cut government revenue.

Rodriguez said the situation has stabilized, though, and the government will maintain estimates of 0 percent growth this year and 0.5 percent growth next year. He called that "an achievement, given the situation."

Central Bank President Nelson Merentes, meanwhile, announced plans to create a $232 million fund to finance public and private development projects as a means of boosting economic growth.

Venezuela relies on oil for 93 percent of its export earnings. But while world oil prices have been rising recently, prices for benchmark light, sweet crude are still 46 percent below last year's peak.

Rodriguez declined to say whether the government would loosen strict currency controls that have hurt Venezuelans' ability to spend money abroad on travel or imports. But he added that the government will likely sell more dollars to importers next year.