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Current account surplus shrinks amid import induced narrowing of the trade
surplus
The current account deficit reached US$ 2.8 billion in the third quarter,
equivalent to 2.1% of GDP. The third quarter figure was just a notch above
market expectations. In the second quarter, the current account surplus
had reached US$ 3.3 billion and in the same quarter last year the surplus
was US$ 3.9 billion. The narrowing over last year’s current account
surplus was due to a lower trade surplus, which dropped from US$ 5.1
billion to US$ 4.3 billion. The decline in the trade surplus reflected a
strong drop in exports, which were down 14.6% year-on-year, whereas
imports contracted at a lesser 13.1% yoy. The weak export performance was
prompted mainly by a 17.9% drop in oil exports in the third quarter
compared to the same period last year, while non-oil exports actually
increased a modest 2.0%. The capital account deficit narrowed from US$ 3.1
billion last year to US$ 1.5 billion in the third quarter, amid positive
net foreign direct investment (FDI) inflows of US$ 508 million, which was
up from the US$ 68 million outflows for the same quarter last year. The
annual current account surplus dropped from US$ 9.9 billion in the second
quarter to US$ 8.9 billion in the third. Consensus participants anticipate
the surplus to widen to US$ 10.5 billion by year-end. Furthermore, the
pick up in domestic demand next year is likely to push up import growth
notably, while exports will only grow more moderately. As a result, the
trade surplus should narrow and reduce the current account surplus to US$
8.4 billion in 2004.
Signature collection for recall referendum proceeds as scheduled
From 28 November to 1 December, the process of signature gathering for a
recall referendum over the Chávez presidency and national legislators
proceeded as authorized by the National Electoral Council (CNE, Consejo
Nacional Electoral) in October. In order for the CNE to approve the
referendum, the opposition has to receive 20% of registered voters’
support (2.5 million). The CNE now has 30 days to verify the signatures
and make a pronouncement. Once verified, a referendum can be held within
90 days. Current opinion polls indicate that 76% of Venezuelans would like
to recall Chávez. If voters decide to recall the President, then new
elections would be held 30 days following the referendum, which could mean
that national elections would take place in May of next year at the
earliest. Of course, the current time schedule assumes that the Chávez
administration does not interfere with legal challenges in the electoral
process. Following the signature gathering, officials have already filed
allegations with the CNE over electoral fraud. Ongoing non-cooperation is
likely to delay resolution to the current political state-of-play and
could foment social discontent further. As a result, the prospects for a
turnaround from the current recession would be undermined further. |
