Without having too many illusions, Deniris Camacho, 60, is waiting for his first customer of the day in his clothing store in Caracas. In recent months, its sales have been mediocre in a Venezuela that is struggling to recover from a decade of crisis, with consumption falling again after a period of growth.
“Little by little. Every day a little less” sales, she explains in front of her stand at the market in the city center where she has worked for more than 30 years. In 2022, however, she was delighted with an economic recovery of 15% in the country. But since December, it’s been a slow erosion.
The drop in sales is “double digit” in trade and services, according to the National Council for the sector (Consecomercios), which has produced its own statistics in the absence of official data.
Sales “or people served” decreased by 21% in the capital and the central region in the first 5 months of the year compared to 2022. In the East and West, the contraction is 44% respectively and 34%.
During the economic “timid recovery”, traders “have ventured to restock” but now they are “no longer moving”, explains the president of Consecomercios, Tiziana Polesel.
The company Datanalisis estimates the drop in consumption at 6%, while reporting a loss of consumer confidence of 23%.
“There was growth and the hope that it would continue,” Luis Vicente Leon, director of Datanalisis, told AFP. The upside has been “overstated”, he says pointing out that there is now an “overstatement of the downside”.
Consequence: Mrs. Camacho may put some items on sale, her merchandise remains on her hands. It does not exceed 10 sales per month against an average of thirty last year.
After a deep crisis that saw GDP compress by 80% between 2013 and 2021 and 7 million people leave the country, the effects of the economic rebound in 2022 have been felt mostly in urban areas like Caracas, where new establishments (restaurants, shops) have opened.
Some have already closed, while others have had to revise their strategy due to weak demand. Thus, according to analysts, the timid signs of economic recovery in 2022 are beginning to be overshadowed by new signs of crisis.
“There are no economic policies that lead to sustained growth, the rebound effect we saw last year was linked to oil prices,” says economist Pilar Navarro, of EMFI Securities.
The economy has been slowing since the end of last year. This coincides with the outbreak of the corruption scandal that rocked the giant public oil company PDVSA. Nearly $3 billion was missing, according to news reports.
This situation has affected monetary liquidity and government cash flow, further destabilizing the exchange rate in a de facto dollarized country.
Inflation, which was under control for a while, has also resumed, directly affecting consumers’ purchasing power. With 436% inflation (year-on-year to May), “it is difficult for any employee to maintain their purchasing power”, underlines the professor and former foreign exchange chief of Banco de Venezuela, Hermes Pérez.
Power cuts and fuel and gas shortages reappeared, particularly in the interior of the country.
But the economy did not collapse, qualify some experts, thanks in particular to the income obtained by the exploitation of the American oil company Chevron, authorized by the United States to work in a limited way despite the American sanctions.
“The reason you didn’t see macro devaluation between March and May is that there are dollars in the market, otherwise the dollar would have skyrocketed. And where did those dollars come from? From Chevron, there is no other source at the moment”, analyzes Vicente Leon.
Hermes Pérez estimates that the market receives approximately $100 million per month from Chevron.
An amount that may seem low compared to the historic oil revenues of Venezuela, which has already produced more than 3 million barrels per day against 800,000 today.
But “it’s quite important” while the country is economically suffocated, he said.
Deniris Camacho and other traders are waiting. “We are still here,” says Marielba Clavo, who has been selling vegetables for 33 years. “I wish things were better, but… I’m grateful for what we have.”
06/16/2023 17:43:17 – Caracas (AFP) – © 2023 AFP